HANOI: Credit by the end of June 2024 increased by about 6% compared with the beginning of the year, reaching nearly 14.4 quadrillion dong, a positive signal showing this year’s credit growth target of 14%-15% is within reach, experts say.

The loans that credit institutions provided to the economy in 1H24 were at the highest level compared to the same period in the past three years, the latest data from the State Bank of Vietnam (SBV) showed.

There was concern that the banking industry would find it difficult to meet the government’s credit-growth target of 5%-6% in 1H24, as credit growth by the end of May this year was only 2.4%.

However, credit accelerated in June, especially in the last week of the month (up more than 1.5%), helping the industry meet the target.

Of the total, consumer loans made up more than three quadrillion dong, accounting for more than 21% of the total.

According to the SBV, the acceleration of credit growth in the last week of June is a normal phenomenon, with credit tending to increase in the second half of a year and decreasing in the first months of a year.

According to the heads of several banks, enterprises often focus on negotiations in the early part of the year, while contracts were mainly signed from mid-year.

Therefore, most large credit contracts are also disbursed in the second half.

Experts attributed the credit growth to recovery in loan demand, tax and fee reduction policies and implementation of preferential interest rate packages.

Experts forecast loan demand in the second half of this year will continue to accelerate thanks to macro-economic recovery.

The manufacturing sector has shown signs of recovery, the industrial production index in the past six months was estimated to increase by 7.54% over the same period in 2023.

Regarding import and export, in the first half of this year, export value reached US$190.73bil, an increase of 14.9%, while import value reached US$178.88bil, up 17.3%.

In addition, according to a recent report of credit rating agency FiinRatings, credit growth for the real estate sector, including investment in real estate corporate bonds by commercial banks, has the potential to recover when legal problems are gradually being resolved.

New laws are also expected to create more favourable conditions for the real estate sector.

Currently, a positive factor for credit growth is that interest rates for loans are maintaining a stable level, in spite of a rise of 0.4-1.6 percentage point per year in deposit interest rates in recent months.

Commercial banks have so far also affirmed that they will maintain low lending interest rates to stimulate credit demand.

Analysts believe that with the acceleration in loan demand by enterprises in the second half of 2024, the government’s annual credit growth target of 14%-15% can be achieved.

MBS Research, a research centre under the MB Securities Joint Stock Co (MBS), forecast that credit growth will hit 14% in 2024, given an expected gross domestic product growth rate of 6.3%-6.5% for the year.

Drivers for growth include the recovering consumer finance market, increased credit card usage, robust import-export activity, and high demand for auto loans.

Low lending rates, signs of a reviving real estate market, along with a surge in inventory and land-related tax revenue will also stimulate loan demand in the near future, according to MBS Research.

Echoing the view, the Maybank Vietnam Securities Co said that credit growth since the beginning of the year has been reasonable and good enough.

It predicted that credit growth will accelerate in the third quarter thanks to the real estate market’s recovery.

 - ANN