Significant challenges remain for the banking industry to reach theannual credit growth target this year, despite certain improvement inlending situation, State Bank of Vietnam (SBV) officials have said.

SBV Governor Nguyen Van Binh has reported to the National Assemblythat lending across the nation grew 7.89 percent in the first 10 months,while the target for 2013 was 11-12 percent.

Thedirector of the central bank's Credit Department, Nguyen Viet Manh, saidthat total outstanding loans reaching over 3,290 trillion VND (156.67billion USD) at the end of August was considerable progress comparedwith about 3,092 trillion VND (147.24 billion USD) recorded at the endof last year.

"We have regulated money incirculation at reasonable levels, while having capital reserves preparedfor lending expansion by year-end without affecting money supplyplans," said Binh, adding that agricultural loans were increasingnotably with a variety of preferential packages offered in this area.

The central bank estimated lending in agriculture andrural areas to have grown 15 percent this year to September, doublingthe general credit growth in the economy for the period.

However, export lending expanded slowly at 3.61 percent in the firsthalf, compared with 17.1 percent reached at the end of last year.

Manh said lenders now needed to focus finances more on prioritisedsectors and continue to review customers' capacity and economic areas'recovering ability to provide them with suitable support.

They should hasten implementation of the Government's 30 trillion VND(1.43 billion USD) property bailout, while the central bank activelyconsidered allowing banks to raise credit quotas following theirproposals.

SBV Monetary Policy Department directorNguyen Thi Hong said factors long hindering credit growth stillremained, including lenders' caution in the face of high bad debts, weakdemand and the low capacity of businesses accessing markets."Shortcomings have been accumulated for years and the economy is hittingsnags," she said.-VNA