Vietnam tells its banks to boost lending

Vietnam's central bank called on banks to step up lending to support economic expansion after lending in the first nine months of the year has slowed and economic growth stayed below annual targets.

Vietnam's gross domestic product grew 6.52% in the first nine months of 2008, slowing from last year, when the $71-billion economy rose 8.5%.

State Bank of Viet Nam Governor Nguyen Van Giau urged commercial banks "to build up their business plan, continue to expand raising deposits and credit growth to the economy at reasonable interest rates", a central bank statement said.

Vietnamese banks needed to watch the U.S. financial crisis closely to to limit its impact on Vietnam's economy, the statement quoted a directive signed by Giau on Thursday as saying.

The directive comes after bank lending slowed in the first nine months of this year, compared with annual credit growth of 30% in the same period in 2007, a state-run newspaper said on Friday.

Banks' deposits between January and September rose 10.71% from the first nine months of 2007, the Thanh Nien (Young People) newspaper cited a State Bank of Viet Nam report but gave no lending or deposit values.

Agribank, Vietnam's top bank by assets, said outstanding loans were up 12.7% in the first nine months of 2008 from the end of last year as the central bank has curbed annual loan growth to tame inflation.

The central bank aims to curb banks' credit growth at 30% in 2008 to fight double-digit inflation, after lending surged 54% last year.

But the directive issued on Thursday said while banks needed to control credit quality, especially real estate loans, they should expand lending to support exports, farming and big national projects. (Reuters)