Vietnam’s banking industry will focus on credit growth in 2024 as it relates closely to economic growth, say analysts.

Last year, credit growth was lower than predicted but improved considerably towards the end of the year.

The low credit growth was predominantly down to inflation, a weak economy, high lending rates, low exports and freezing in the real estate market, Vietnam Plus reports.

However, credit is forecast to increase substantially this year according to analysts, due to loose monetary policy and a low interest rate environment.

As part of a recent 2024 strategy report published by analysts at VNDirect Securities Company, credit growth in Vietnam will hit around 15% in 2024, based on the GDP growth target of between 6% and 6.5%.

The report states that companies’ loan demand for working capital is forecast to rise in the first half of this year due to the global economic recovery.

“As the real estate and consumer sectors are forecast to recover with strong growth in the second half of 2024, we believe that the credit growth target of 15% this year is completely feasible,” according to the VNDirect report.

Leading in credit growth in 2024, say the findings, will be VPBank, HDBank, MB, LPBank, VIB and Techcombank. In addition, the banks will have a larger net interest margin (NIM) than the industry’s average. The NIM of the banking industry as a whole is forecast at 4.6% this year, according to VNDirect

Furthermore, the State Bank of Vietnam (SBV) has urged commercial banks to concentrate on lending at the start of the year. Rather than previously only allocating a part of credit growth quota for banks at the beginning of the year, the central bank has assigned the entire 15% credit growth target for banks from January.

The allocation of all credit growth quota in January is forecast to bolster aggregate demand and generate favourable conditions for banks to provide capital to meet economic growth needs, according to SBV Deputy Governor, Dao Minh Tu.