With the implementation of numerous credit management solutions, the credit of the banking sector has been growing well since the beginning of the year. The credit structure recorded positive adjustments, in which credit was focused on production, business and priority areas. The credit to the areas with potential risks; build-operate-transfer (BOT) and Build-Transfer (BT) transport projects; and consumption was under control.
Data from the state Bank of Vietnam (SBV) showed that by the end of June 2019, the outstanding credit to the economy increased by 7.33 percent compared to the end of 2018. The capital source of banks timely met the capital demand serving production and business, and legitimate needs of businesses and people.
Talking about the credit management in the first half (H1) of 2019, Nguyen Quoc Hung, director of Credit Department of Economic sectors (under the SBV) said that to facilitate and support people and businesses to improve the loan access ability, the SBV has directed CIs to continue simplifying lending procedures.
Accordingly, by the end of June 2019, the outstanding loans for paying consumption and living expenses of individuals increased by 8.14 percent and accounted for 20.09 percent of the total outstanding credit. This growth rate was 8.88 percent in the same period of 2018, accounting for 17.71 percent).
Some banks have actively exploited consumer credit programmes, such as Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank) implementing a consumer credit programme of about five trillion dong. Up to now, there have been 34,761 borrowers with lending revenue reaching 677.8 billion dong and outstanding credit reaching 500.5 billion dong.
Bank for Social Policies is also implementing 20 preferential credit programmes to meet the needs of production and business and consumption of poor households, ethnic minority households and policy beneficiaries with outstanding credit reaching 196.341 trillion dong, nearly 6.7 million households still having outstanding loans, up by 4.55 percent compared to 2018.
As estimated, by the end of June 2019, the credit to construction sector increased by 6.43 percent, while the credit to trade and service sector increased by 7.3 percent and to agriculture, forestry and fisheries increased by four percent.
For priority areas, the outstanding loans increase was 15.5 percent for exports (it was a decline of 1.42 percent in 2018, accounting for 3.01 percent); 6.03 percent for small and medium-sized enterprises (15.57 percent increase in 2018, accounting for 18.2 percent); 7.53 percent for high-tech application businesses (2.2 percent decrease in 2018, accounting for 24.8 percent); and 5.81 percent for supporting industries (14.58 percent increase in 2018, accounting for 3.09 percent).
Along with the promotion of lending to production, business and priority areas, the credit to real estate sector and areas with potential risks continued to be controlled.
In particular, real estate lending was controlled in the direction of gradually reducing the proportion of real estate loans, and gradually increasing the outstanding consumer real estate loans, directing capital to housing segments, meeting the real needs of people.
Statistics of the director of Credit Department of Economic sectors showed that by the end of June 2019, the outstanding loans to real estate sector reached nearly 1,400 trillion dong, up by 6.5 percent compared to the end of 2018. In which, real estate loans were 473.7 trillion dong, up by 2.5 percent; and consumer real estate loans were 919.6 trillion dong, up by 9.4 percent compared to 2018.
Prioritising production in H2
In addition to the achievements, the SBV said that there are some difficulties affecting the credit activities of CIs in H1, such as the negative effects to agricultural production due to natural disasters, epidemics; the unstable agricultural market consumption, etc. In addition, the recovery of the loans for building and upgrading of ships according to Decree 67/2014/ND-CP in localities still faced many difficulties and bad debts tended to increase. The implementation of housing support loan programme remains unfavourable due to the insufficient funding allocation. The credit for SMEs still encountered difficulties as there is a lack of guidelines on how to determine the charter capital of the Guarantee Fund for SMEs when carrying out model transformation.
On the basis of the existing difficulties and to promote the achieved results, Hung said that in H2 2019, the SBV will continue to direct CIs to expand credit and prioritise capital for priority areas, continue to effectively carry out specific credit programmes under the direction of the government.
Along with that, administrative procedures in credit and banking activities should be promoted, procedures should be improved, and loan approval time should be shortened. Commercial banks should be encouraged to develop mobile banking models in disadvantaged areas, creating conditions for customers to be more convenient in accessing capital and other banking services.
The banking sector will also carry out solutions to remove difficulties for people, such as considering debt extension, adjusting debt repayment term when people face difficulties in repaying debts on time due to plausible causes, helping people not to borrow at high interest rates from black credit lenders.
At the same time, the SBV shall review the proposal on improving and supplementing consumer lending mechanisms and policies of finance companies; coordinate with related ministries and industries to submit to the government and the government inspectorate to raise the lending limit for a number of preferential credit programmes (for students and job creation), and expand borrowers and borrowing purposes serving the basic necessities of households which have newly escaped the poverty, etc.
Particularly, the SBV will closely monitor the growth of real estate credit, and real estate market developments in order to issue appropriate management directions; strengthen inspection and supervision at CIs having high real estate credit growth and large proportion of real estate loans; and promote communication on the direction of management as well as the adjustment of regulations on credit for real estate.
