HANOI — Vietnam’s central bank said on Tuesday bank lending and bad loans were both rising and vowed to continue defending the currency and keep inflation under control.
The Southeast Asian economy has seen growth picking up in the last quarter but is facing turbulence in the banking sector and a rise in inflation.
It is also using its reserves to fight the depreciation of the dong, caused by high interest rates in the United States and rising imports.
“Banks’ lending has accelerated over the past two-to-three months after shrinking in the first two months of the year,” central bank deputy governor Dao Minh Tu told a regular press briefing in Hanoi.
He noted loans had increased by 6 percent in the first half of the year from the level recorded at the end of 2023.
That means the target of 15-percent annual credit growth this year was within reach, as lending tends to pick up in the second half of the year a critical goal as economic growth in Vietnam depends heavily on bank loans.
However, bad loans are also growing, largely as a result of troubles faced by the banking system last year.
The deputy governor said nonperforming loans were “high,” amounting to 5 percent of outstanding credit and could rise to 6.9 percent.
“We will have more proactive measures to ensure quality of loans and control bad debts to guarantee the safety of the system,” he said.
The bank also reiterated its vow to defend the currency.
It commenced dollar sales in mid-April and will continue to keep foreign exchange rates stable, Tu said, declining to answer a question about the current level of foreign reserves.
That is also aimed at containing inflation, which was at 4.3 percent in June, just slightly below the 4.5 percent ceiling set by the government for this year.
Tu also repeated that weaker banks needed consolidation and confirmed that Saigon Joint Stock Commercial Bank, once one of Vietnam’s largest private lenders by deposits before a bank run in 2022, was still under the central bank’s management.
That cost the central bank about $24.5 billion as of late May in loans to shield depositors, Reuters reported in June.
