On February 11, 2025, at the Government’s Headquarters, Prime Minister Pham Minh Chinh chaired a Dialogue Conference between the Government’s Standing Committee and a number of commercial banks in order to accelerate and promote the economic growth, while still controlling the inflation.
Prime Minister Pham Minh Chinh chairs the Conference between the Government’s Standing Committee and several commercial banks
The banking sector and the country to make breakthroughs in 2025
Delivering his opening speech, Prime Minister Pham Minh Chinh highly complimented and praised the banking sector's contributions to the country's overall achievements in 2024. According to the Prime Minister, the monetary policy is the lifeblood of the economy, contributing to controlling the inflation, maintaining the stability of the macroeconomy, and achieving impressive results in the economic development. The banking sector, including the commercial banks had made great efforts to contribute to the country's development process over the past time.
According to the Prime Minister 2025 is identified as the year of acceleration, and the Government has set a target of achieving a high economic growth of at least 8%. The Head of the Government hoped that the banking sector would leverage its full potentials to turn the advantages into actual drivers and momenta for the country's development.
Speaking at the Conference, Governor Nguyen Thi Hong said that the entire banking sector is fully aware that 2025 is a year of acceleration and breakthroughs, making sure to promote the economic growth at 8% or higher, while still controlling the inflation, and also showing the highest sense of responsibility and determination to build appropriate management solutions.
In terms of credit, in 2025, the SBV has set the credit growth target at about 16%, and would make appropriate adjustments based on the actual situation. According to the Governor, the SBV would closely follow the actual developments. If inflation is controlled at a low level, the SBV could raise the credit growth target, and vice versa.
SBV Governor Nguyen Thi Hong speaks at the Conference
In terms of the interest rates and the exchange rate, the Governor said that this is a challenging task. The commercial banks need to review and cut down on their operational costs in order to reduce the interest rates. In terms of the credit management, the SBV would utilize the available channels to supply the banks with money so that they would not face any capital shortages. In terms of the exchange rate, the SBV would follow closely and operate the exchange rate flexibly in accordance with the market developments.
The banking sector has made strong efforts to overcome difficulties and challenges
Reporting at the Conference, First Deputy Governor Dao Minh Tu said that in 2024, despite facing many difficulties and challenges from the international and domestic economic situations, under the close leadership of the Party, the strong determination of the Government, and the effective directions of the Prime Minister, Vietnam has realized all 15 out of 15 targets, reaching and exceeding the plan.
Deputy Governor Dao Minh Tu speaks at the Conference
Accordingly, the monetary policy management had contributed to controlling the average inflation at 3.63%, strengthening the macroeconomic stability and ensuring the key balances of the economy, supporting the economic growth at the rate of 7.09%, higher than many countries in the region and around the world. The SBV had continued to operate the key interest rates at low levels to guide the market to reduce the lending interest rates, support businesses and the people, thereby reducing the average lending interest rate by 1.24% as compared to the end of 2023. The foreign exchange market and the exchange rate were also stable. The liquidity of the credit institution system was abundant, meeting the capital demands of the economy, contributing to controlling the inflation and maintaining the stability of the exchange rate.
The SBV had promptly directed the credit institution system to implement many solutions to promote an effective credit growth, increasing by 15.08% as compared to the end of 2023, and achieving the planned target, providing an additional 2,200 trillion VND to the economy. In addition, the SBV had actively removed and addressed the difficulties and obstacles in accessing and absorbing credit capital for businesses and the people. The SBV had also directed the credit institutions to implement strongly the credit policies and programs; some programs had proven to be very effective and had been extended and upscaled several times. The banking sector had also implemented various solutions to support their customers to overcome the difficulties, especially after Typhoon Yagi. Remarkably, the policy of rescheduling debt payments and maintaining debt classifications had helped the people and businesses to overcome their difficulties and to recover their production and business operations.
In addition, the implementation of the Scheme on restructuring the system of credit institutions in association with the settlement of bad debts had continued to be carried out strongly. Active measures had been taken to address poor-performing credit institutions, with the SBV having successfully completed the mandatory transfers of four poor-performing banks. Bad debts had been focused on for settlement and controlled at a level lower than the targeted 3%. Commercial banks had enhanced their management capabilities, financial strengths, and profitability.
Furthermore, the legal frameworks for banking operations had continued to be reviewed and improved to meet the practical requirements, facilitating the operations of the credit institutions, and improving the access to credit for businesses and the people. In particular, after the promulgation of the Law on Credit Institutions at the beginning of 2024, the SBV had promptly issued and submitted to the competent authorities for issuance several Decrees, Circulars, and Decisions providing guidance for the consistent implementation of the Law from 1 July 2024. These include the regulations on the application of the digital transformation to facilitate the electronic credit granting.
Eight key tasks and solutions for the banking sector
In the closing speech at the Conference, the Prime Minister instructed the Office of the Government (OOG) to collaborate with the SBV and the relevant ministries/agencies to evaluate the situation, tasks, and solutions, particularly gathering and incorporating the opinions expressed at the Conference. The OOG was also tasked with urgently completing and presenting the conclusions of the Government’s Standing Committee at the Conference. The Ministries and agencies, based on their functions and responsibilities, should address and resolve any issues raised at the Conference.
The Prime Minister expressed gratitude for the heartfelt and responsible interventions of the participants, with highly practical observations, sharing valuable experience and also expressing concerns related to the banking sector in particular and the country’s development in general. He highly appreciated the contributions of the commercial banks in the process of national development and construction, particularly in the social security efforts, helping to address the consequences of diseases, climate change, floods and typhoons, especially the COVID-19 pandemic and Typhoon Yagi. This also includes the Prime Minister's call for the elimination of temporary and dilapidated housing in 2025, as well as various credit packages to stimulate the growth in agriculture and social housing.
The Prime Minister outlines 8 tasks and solutions of the banking sector in 2025
In 2024, the banking sector, including the commercial banks, had played a crucial role in maintaining the stability and promoting the macroeconomic growth, ensuring the key balances of the economy, contributing to reducing the budget deficits and controlling sovereign debts, public debts, and foreign debts. The banking sector had also shared the difficulties with the people and businesses, accepted to cut down on its profits to reduce the lending interest rates. The Prime Minister also commended the SBV for having completed the mandatory transfers of several banks, improving bad debt control, and participating in BOT projects and other critical government’s and businesses’ projects.
The Prime Minister identified three key lessons learnt: Firstly, there must be shared responsibility with the people and businesses during difficult times, even at the expense of part of the banks’ profits. Secondly, staying closely attuned to the global, regional, and domestic situations is essential to propose and address institutional challenges promptly and flexibly. Lastly, there must be unity, coordination, and collaboration among the agencies within the political system and the banking system to address the country’s key challenges.
In order to achieve those objectives, the Prime Minister outlined eight key tasks and solutions that the banking sector and the commercial banks must focus on in the near future:
1, Reducing the operating costs and re-organising the operations for greater efficiency, particularly by compromising part of the profits to lower the lending interest rates in order to support the economy, the people, the businesses, as well as to foster livelihoods.
2, Concentrating credit on renovating the three major growth drivers, which are: investment (with public investment leading private investment), consumption (via credit packages for consumers and the key economic sectors, creating jobs and shifting the economic structure), and exports.
3, The SBV and the commercial banks should pioneer in the digital transformation, continue applying science and technology, developing digital databases, continuing to implement Scheme 06, and adopting the Politburo’s Resolution No. 57 on scientific innovation and digital transformation, alongside piloting virtual banks.
4, Cutting down on administrative procedures, prevent corrupted behaviours in the banking operations, combat corruption and waste, reduce bad debts, and create a more favourable environment for the people and businesses.
5, Focusing on governing and building smart banks, enhancing the capacity and the capabilities of all banking staff, aiming for the common goal of developing the nation, and strengthening the adoption of international best practices.
6, Encouraging the banks to contribute more effectively to the three strategic breakthroughs in institutions, infrastructure, and human resources, providing feedbacks on law-making, mobilising capital for infrastructure development, and training human resources for the country’s new era.
7, Developing preferential credit packages for social housing, contributing to the elimination of temporary and dilapidated housing, particularly offering incentives to young people seeking stable housing and employment.
8, Fostering strong collaboration with state management agencies to develop a healthy, united banking sector that not only focuses on business operations but also contributes to the overall benefits of the nation.
The Prime Minister emphasised that these eight solutions, while suitable for the current year, are also long-term goals, requiring strong determination, efforts, and decisive actions, with clear delegation of responsibilities, timelines, and accountability for effective monitoring and supervision. Regarding the monetary policy management, it should be proactive, flexible, and efficient, serving as a vital support for the people, businesses, and the national development. In the near future, the Prime Minister also recommended that Resolution 42 on bad debt settlement should be legalised and presented to the National Assembly at its session in May 2025, and the importance of the prompt increases of the charter capital for state-owned commercial banks…
HY-HP