Vietnam plans faster lending in 2015 to spur growth

Reuters

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Bundles of dong bank notes are seen in Hanoi, Vietnam. Bundles of dong bank notes are seen in Hanoi, Vietnam.

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Vietnam expects lending to pick up next year, rising by up to 15 percent to accommodate a quicker economic expansion after inflation in 2014 was pegged at its lowest level in 13 years, central bankers said on Tuesday.
Nguyen Thi Hong, a deputy governor of the State Bank of Vietnam (SBV), told a news conference credit growth this year may rise at an annual 13 percent, against 12.52 percent in 2013.
Vietnam has targeted annual growth of 6.2 percent this year, up from 5.8 percent expected in 2014, on stronger manufacturing and exports.
Lending is crucial to the SBV's moves to balance boosting credit amid weak consumption, and spurring economic growth while curbing non-performing loans (NPLs) shackling the economy.
Bad debt would account for 3.7 to 4.2 percent of total loans this year, down from 17 percent in September 2012, Prime Minister Nguyen Tan Dung said last month. Vietnam wants to cut the ratio to 3 percent by the end of 2015.
Moody's this month upgraded Vietnam's banking outlook to stable from negative, citing macroeconomic stability and lower liquidity stress, but said asset quality and profit outlook was a concern.
Vietnam registered a balance of payments surplus of $11 billion this year, the SBV said.
Loans as of Dec. 19 rose 11.8 percent from 2013 and are on track for the targeted 12-14 percent, the SBV said.
Rural and agricultural credit would rise 12.8 percent this year, compared with just 4 percent loans growth for small and medium businesses, said Nguyen Tien Dong, head of the SBV's credit department.
"We've launched credit programmes in very difficult conditions, with the biggest challenge being weak demand," Dong said.
Despite increased lending, annual inflation would slow to a maximum 2 percent, lower than an earlier government projection and would be the slowest pace since 2001.
NPLs in Vietnam's dozens of banks have hurt the property market and tightened credit needed to boost consumer spending and keep businesses afloat.
The SBV has an asset management firm helping banks and businesses to clean up their balance sheets, but it has resolved only 4 trillion dong ($187 million) of bad debts so far, just 3.25 percent of the 123 trillion dong in NPLs it bought from banks, a VAMC official said.

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