Vietnam central bank cuts credit growth target to 15% after warnings on asset bubbles

HANOI: Vietnam’s central bank has cut its target for credit growth to around 15% this year, it said over the weekend, after warnings of financial risks from last year’s credit splurge.

Last year, the country reported rapid credit growth of about 20%, as authorities sought to support economic expansion, though economists expressed concerns about price bubbles.

The bank “projects system-wide credit growth at approximately 15%” this year, it said in a statement dated January 10.

In the Communist-run country, the central bank’s projections are effectively instructions given to lenders and are viewed as both a target and a ceiling.

The new target is lower than the 16% the bank initially set for 2025 before raising it during the year.

It did not disclose the adjusted target for last year.

“In our view, the State Bank of Vietnam has tried to be receptive to market feedback,” said Willie Tanioto of Fitch Ratings, noting that the target may shift later in the year or may be scrapped.

The central bank said it had asked lenders to tighten controls over loans to risky sectors, including real estate.

Shares of several real estate companies fell last week after rumours began circulating about the central bank’s imminent tweak to its loan policy, stock traders said.

Shares of Vinhomes, Vietnam’s largest property firm, were down 6.4% on Monday morning, driving down Vietnam’s real estate sector, which fell about 5%.