On January 8, 2024, the State Bank of Vietnam (SBV) organized a Conference to disseminate the tasks of the banking sector in 2024. Prime Minister Pham Minh Chinh attended and delivered a speech at the Conference.
Governor Nguyen Thi Hong delivers an opening speech at the Conference
Actively contributing to the socio-economic recovery and development
In her opening speech at the Conference, SBV Governor Nguyen Thi Hong said that 2023 had been a particularly difficult year for the socio-economy in general and for the banking operations in particular, in light of the global sluggish growth, high inflation rates around the world, a decline in the global trade, and the geopolitical conflicts.
In the domestic market, although the real estate and the corporate bond markets have been improved thanks to the Government's strong management, there are still many difficulties and obstacles putting pressure from demands for the banks’ capital. Besides, the mass withdrawals at SCB at the end of 2022 significantly affected the liquidity and the market psychology.
According to the SBV Governor, those are the enormous challenges for the Government's management, especially when Vietnam’s economy is highly open, with the economic growth mainly dependent on exports and the FDI attraction, and the economy's investment capital relying mainly on the banks’ credit.
In that context, with the efforts of the entire political system, as of the end of 2023, the domestic economy had achieved many encouraging results in various fields. The macro-economy was basically maintained stably, the economic growth was recorded at 5.05% (lower than the target, but relatively high as compared to other countries in the world and the region), the inflation was controlled at 3.25% (lower than the target of 4.5% as set by the National Assembly), the major balances of the economy were guaranteed, creating a sustainable ground for the development in the coming time.
Regarding the banking industry, according to the SBV Governor, right from the beginning of 2023 and throughout the year, the SBV had responded to the external developments in an active and flexible manner, contributing to the overall achievements in the socio-economic development of the country. Specifically, the SBV has closely monitored the macro-economic developments in the domestic and international markets, managed the monetary policy tools with the appropriate adjustments, contributing to controlling the inflation at 3.25% (lower than the target of 4.5% as set by the National Assembly), maintaining the stability in the forex market (the VND depreciated by less than 3%), and improving the State foreign exchange reserves, etc.
In addition, the SBV had cut down the key interest rates 4 times, contrary to the hikes in the interest rates around the world; maintained the abundant liquidity to support the credit institutions to reduce the lending interest rates. Currently, the mobilizing interest rates and the interest rates applied to new loans have decreased by about 2.0% p.a. compared to those of the end of 2022.
First Deputy Governor Dao Minh Tu announced the Banking Sector’s Action Program for 2024
Managing the monetary policy in a proactive and flexible manner, contributing to the overall success of the economy
The SBV had issued a policy on rescheduling the debt payment and maintaining the debt groups, and had conducted several credit programs, coordinated with the cities and provinces to organize 460 bank-enterprise connection conferences. As a result, as of the end of 2023, the credit growth rate had reached about 13.5%, slightly lower than the level of 14.18% in 2022.
The SBV had also implemented the Scheme of Restructuring the system of credit institutions in association with NPL resolution for the 2021-2025 period, which is currently in the final stage of completion before the legal transfer.
Over the past year, the SBV was also one of the Ministries and agencies pioneering in the digital transformation. Moreover, the administrative reform, the improvement of the legal frameworks for the monetary and banking operations, the foreign relations, the communications, etc. had all continued to be actively implemented, contributing greatly to the overall achievements of the entire banking sector last year.
Continuing to manage the monetary policy tools in a proactive, flexible and consistent manner
According to SBV Governor Nguyen Thi Hong, in 2024, the global economic outlook and the international markets would continue to experience complicated developments. The domestic economy is still expected to face many difficulties and challenges. In that context, the SBV would continue to focus on a number of key orientations and solutions.
The SBV would continue to closely monitor the economic developments and the situations in the world and the domestic economy to manage the monetary policy in a proactive and flexible manner, in close coordination with the fiscal policy and other macro-economic policies, thereby contributing to controlling the inflation, maintaining the macro-economic stability, the stability of the money and forex markets, and ensuring a prudent banking system.
Regarding the interest rates, the SBV would regulate the interest rates and the exchange rate in accordance with the market situations, the macro-economic developments, and the monetary policy objectives.
Regarding the credit operations, the SBV would manage the credit growth in a proactive and flexible manner, in accordance with the macroeconomic developments, meeting the capital demands of the economy. In addition, the SBV would continue to direct the credit institutions to focus credit on production and business operations, the priority sectors and areas, and the growth drivers (investment, consumption, export) in alignment with the Government's policy; controlling strictly credit for the potentially risky areas. Besides, the SBV would also continue to accelerate the implementation of the assigned tasks of the banking industry; creating favorable conditions for businesses and people to access bank credit, removing difficulties for and promoting the expansion of safe and healthy consumer credit, contributing to restricting "black credit".
Implementing strongly the Scheme of Restructuring the system of credit institutions in association with NPL resolution for the 2021-2025 period; speeding up the NPL resolution; making efforts to keep the 2024 NPL ratios in the balance sheets of the credit institutions (excluding the poor-performing commercial banks) below 3%.
In addition, the SBV would continue to improve the banking legal frameworks to create a consistent and favorable legal basis for the management of the monetary policy and the banking operations; Coordinating with the National Assembly entities to finalize the documents for the submission of the revised Law on Credit Institutions to the National Assembly at an earliest session of the National Assembly.
Accelerating the digital transformation in the banking operations and non-cash payments, meeting the requirements for new business models, products and services on the information technology platforms, digital banking, and digital payments; Enhancing the security and safety in payment activities and the digital transformation.
At the Conference, the representatives from several Ministries, central government agencies and commercial banks also delivered their discussion papers.
Overview of the Conference
Delivering his guiding speech at the Conference, Prime Minister Pham Minh Chinh emphasized the crucial role of the banking sector as the lifeblood of the economy. The Prime Minister also acknowledged and praised the efforts, the strong determination and the encouraging results achieved by the banking sector in 2023, making great contributions to the country's overall achievements in light of many difficulties and obstacles.
In her concluding remarks at the Conference, Governor Nguyen Thi Hong requested the entire banking sector to make enormous efforts to build on the achieved results, showing strong determination to overcome any shortcomings and limitations, striving to successfully accomplish the assigned tasks, contributing to the socio-economic development in 2024, and for the whole period of 2021-2025.
Le Hang