This was revealed in an economic and financial report by the National Financial Supervisory Commission (NFSC), published on its website earlier this week.
The NFSC predicts the credit growth for 2018 at 17-18 per cent, similar to that in 2017.
According to the commission, credit growth in January slowed down due to seasonal factors, such as Tết (Vietnamese Lunar New Year) holidays being around the corner. Deposit growth also slowed down in the first month of 2018 but is likely to pick up from February.
Credit institutions have set a growth target of credit in Vietnamese đồng at 17.71 per cent and in foreign currencies at 7.39 per cent.
Last year’s credit growth in the whole banking system was reported at 18.17 per cent.
The report said the credit structure would tend to post increases in short-term credits with a focus on consumer credit, adding that consumer credit continued its momentum from 2017 and saw increases in January due to high demand in shopping ahead of Tết.
The banking system’s liquidity was also stable, thanks to State Bank of Việt Nam’s purchase of foreign currencies with a net value of VNĐ25 trillion (US$1.1 billion).
Deposit interest rates were also stable, at 6.5-7.3 per cent for deposits in Vietnamese đồng over a 12-month term.
Lending interest rates fell 0.5 percentage points in five sectors to a maximum of 6 per cent for short-term loans and 7.5 per cent for medium and long-term loans. Several commercial banks also cut rates by 0.5-1 percentage point for small and medium-sized enterprises operating in prioritised sectors.
The five prioritised sectors were agriculture and rural development, export, small and medium-sized enterprises, part-supplying industry and high-tech production.
The State Bank of Vietnam recently said that lowering interest rates would be one of its major tasks this year.
NFSC said the Government’s target of lowering lending-interest rates was well-received by commercial banks and was supported by the macro-economic situation, including the fact that inflation was under control and there was little pressure from exchange rates.
It said the business results for banks would continue to be bright this year, fuelled by stable credit growth and quicker resolution of bad debts.
The forex market was also stable in January, with a mild increase of 0.06 per cent in the reference rate compared to the end of 2017 due to the depreciation of the US dollar in the global market, with the USD Index dropping by 2 per cent.
Foreign exchange rates will be supported by many factors in 2018, including an anticipated trade surplus and an inflow of foreign capital into emerging markets to seek higher profits amid low interest rates in developed countries. In addition to this, the US dollar is predicted to depreciate in 2018, NFSC said, citing a forecast by Citibank that the US dollar might depreciate by 5 per cent this year.
Inflation pressure in 2018 will mainly come from the increase in prices of public services (health and education), following a roadmap for the 2016-20 period, and in food prices, especially pork, as the supply might decrease significantly after a surplus crisis last year, according to the NFSC report.