Vietnam's bank credit rose 1.14 pct last month, central bank says

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Vietnam's banking credit rose 1.14 percent in February from a month earlier, raising concerns that the government may fail to achieve its 25 percent loan growth target for the year.

Nguyen Ngoc Bao, director of the monetary policy department at the country's central bank, provided the monthly credit growth figure in a phone interview Wednesday from Hanoi, without elaborating. Credit grew 1 percent in January.

The government's target for 2010 is a moderation from last year's 38 percent growth. Vietnamese lenders are struggling to raise funds and lend to clients because of an interest rate cap by the central bank, said Ho Huu Hanh, head of the State Bank of Vietnam's Ho Chi Minh City branch.

"Although it was higher than January, credit growth is still very low compared with the full-year target," he said.

To spur lending, the State Bank of Vietnam on Feb. 26 allowed banks to set their own rates for certain loans to meet demand. Prior to that, the central bank only allowed lenders to extend loans at 150 percent of its key rate.

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