On July 5, 2019 in Hanoi, the State Bank of Vietnam (SBV) organised an online conference to preliminarily summarise banking operations in the first six months of the year, deploying tasks in the last six months of 2019.
According to the report of the Conference, in the first six months of 2019, following closely the macroeconomic and monetary developments, SBV governed the active, flexible, prudent monetary policy, harmoniously coordinated with the financial policy and other macroeconomic policies to control inflation, supporting economic growth, stabilising the monetary and foreign exchange markets, thus contributing to macroeconomic stability, curbing inflation, facilitating enterprises to develop production and business.
SBV has managed interest rates in line with macroeconomic developments and monetary markets, stabilising interest rates and directing credit institutions to review and balance their finance to apply a reasonable lending rates based on deposit rates and the risk level of the loan, ensuring financial security. As a result, interest rates in the first six months remained basically stable. Currently lending rates of credit institutions are about six to nine percent per year for short term, about 9-11percent per year for medium and long term.
In particular, in the context of domestic and international markets intermingling advantages and disadvantages, SBV actively controlled the central exchange rate in accordance with domestic and foreign market developments and macro balances and currency and monetary policy objectives. The situation of foreign exchange market in the first six months of the year was relatively stable; exchange rate closely followed market conditions; the liquidity was guaranteed, foreign currency transactions remained smooth; legitimate foreign currency needs were fully and promptly met.
With the implementation of credit management solutions, the credit of the whole industry grew well from the beginning of the year, credit structure had a positive adjustment, in which credit focused on manufacturing, business and priority areas. Credit for potential risk areas, BOT, BT projects, consumer credit was under control. Therefore, although in recent years, credit growth was lower and more tightened, but the economic growth rate continued to rise, showing that credit was allocated effectively and qualitatively.
Following the prime minister’s directive, in order to contribute to limiting and repelling shadow banking, in the Directive from the beginning of the year, the SBV Governor has requested credit institutions to step up solutions to solve difficulties and facilitate organisations and people to access capital.
The restructuring of credit institutions also continued to be promoted. The restructuring results of credit institutions have created the stability and safety of the credit institution system. The financial capacity of credit institutions continued to be strengthened and the charter capital gradually increased over years. The scale of credit institutions continues to increase. The operational management capacity, inspection, internal audit and risk management have been gradually improved to approach international practices. The transparency in the operation of the system has be advanced.
From 2012 to the end of June 2019, it is estimated that the whole system of credit institutions handled 937.5 trillion dong of bad debts, of which in 2018, 163.14 trillion dong of bad debts was settled. In the end of June 2019, the bad debt ratio was estimated to be 1.91 percent (this figure fell sharply compared to the level of over two percent at the end of the first quarter, and reached the target set by SBV, bringing bad debts to less than two percent this year).
Regarding bad debt settlement results according to Resolution 42: Accumulated from August 15, 2017 to the end of June 2019, it was estimated that the whole system handled 264.06 trillion dong of bad debts determined under Resolution 42, in which the internal bad debt settlement was 127.641 trillion dong. The results of bad debt settlement determined under Resolution No. 42 in the form of debt repayment customers tend to increase, partly reflecting the improvement of customers’ sense of debt repayment when credit institutions and Vietnam Assets Management Company (VAMC) have the right to seize collateral under Decree decision 42.
In the payment field, in addition to completing the legal basis, SBV has implemented synchronous solutions to boost cashless payment. At the same time, it directs credit institutions to continue investing and developing payment infrastructure; strengthening security, safety, ensuring customers’ interests; as well as deploying the application of the achievements of the 4.0 Revolution in providing payment services. As a result, business promotion activities continue to have many positive changes. Banks have introduced new and modern technologies into payment activities, promoting modern, safe and convenient forms of payment that are positively received by consumers. Business investment centre in the public sector is also constantly promoted and expanded.