On January 9, 2018, the State Bank of Vietnam (SBV) held the first online conference in the year to set out the tasks for the banking sector in 2018 in Hanoi.
The conference was attended by Prime Minister Nguyen Xuan Phuc, Deputy Prime Minister Vuong Dinh Hue and various senior officials from the Commissions of the CPV Central Committee, the President’s Office, the Government Office, the National Financial Supervisory Commission, the Ministries and Government agencies, the members of the SBV Management Board and representatives of the SBV Departments and entities, the Directors of the SBV municipal and provincial branches, the Chairpeople of the Boards of Directors of the credit institutions, the Vietnam Bank for Social Policies, the Vietnam Development Bank, the Deposit Insurance of Vietnam, the joint–venture banks in Vietnam, branches of foreign banks in Vietnam, wholly foreign-owned banks, finance companies, etc.
In his opening speech, SBV Governor Le Minh Hung affirmed that, on the basis of the orientations and directions of the Government, the State Bank of Vietnam has been actively cooperating with other ministries and agencies to make the best use of the recommendations of international monetary and financial organizations, the National Financial and Monetary Advisory Council, the business community, … with a view to managing the monetary, credit and banking policies in a proactive, flexible and synchronous manner, thus facilitating other macro-policies, especially fiscal policies, ensuring the successful implementation of the objectives and tasks of the socio-economic development under the directions of the Government and the Prime Minister. Thus, SBV’s monetary and banking activities have achieved a lot of significant achievements, such as:
The monetary policy management has been active, flexible with the core inflation kept at 1.41%. The lending interest rates are reduced by 0.5 to 1% per annum. The credit growth has been reasonable with the main focus on production and business, especially the key economic sectors in line with the directions of the Government.
The exchange rates, the foreign currency market and the gold market have been operating stably, meeting the demand for foreign currencies of the economy and facilitating effectively the exports. Vietnam’s foreign exchange reserves have reached a new record of over USD 53 billion, contributing significantly to the strengthening of the country's prestige and position, thus creating confidence for foreign investors when investing in Vietnam.
In 2017, the banking sector focused its resources drastically on the second phase of the restructuring and handling of the Non-Performing Loans (NPL) and has achieved many important initial results. In particular, the Government’s approval for the Scheme for “Restructuring the credit institutions system associated with the settlement of bad debts in the period of 2016-2020” (Decision No. 1058), and the National Assembly’s passing of Resolution No. 42 on a pilot scheme for the settlement of bad debts, the Law on Amendments and Supplements to a number of articles of the Law on Credit Institutions have provided the foundation and an important impetus for the acceleration of the restructuring process associated with bad debts settlement.
The administrative reforms throughout the banking system continued to achieve positive results, creating a more open environment, simplifying the procedures and improving the access to credit and banking services, providing great support to the production and business activities.
The banking sector's results directly contributed to controlling the inflation at 3.53%, supporting the high economic growth of 6.81%, creating great balance for the fiscal policy and other macro policies, greatly improving the business environment in Vietnam. A number of prestigious international organizations have reviewed very positively about the performance of the banking system in Vietnam. For example, the World Bank has raised Vietnam's "Access to Credit" index by three levels and now ranking fourth in ASEAN; Moody's raised the outlook for Vietnam's banking system from "stable" to "positive"; and Bloomberg commented that the Vietnam Dong is one of the most stable currencies in Asia...
Governor Le Minh Hung delivers his opening speech
At the conference, SBV Deputy Governor Nguyen Thi Hong presented a summary report on the monetary policy management in 2017 and the orientations for the executive solutions in 2018; SBV Deputy Governor Dao Minh Tu presented the results of the banking inspection and supervision in 2017, the orientations and key tasks in 2018; SBV Deputy Governor Nguyen Kim Anh presented the results of the restructuring of the credit institutions in 2017 and the key tasks in 2018.
Initiation of the emulation movement for the successful accomplishment of the tasks in 2018
At the conference, SBV Deputy Governor Nguyen Dong Tien, First Vice Chairman of the Board of Emulation and Rewards of the Banking Sector, anounced the initiation of “the emulation movement for the successful accomplishment of the tasks set for the Banking Sector in 2018”.. The initiation of the emulation movement is to mobilize all officials, civil servants, employees and workers in the entire sector to strive for the excellent fulfillment of the assigned political tasks. In addition, the entire Banking sector is committed to fulfilling the tasks assigned by the National Assembly and the Government on the key solutions for managing the implementation of the socio-economic development plan, the State budget estimates in 2018, and orientations and directions of the Banking Sector in 2018 with 9 specific tasks.
SBV Deputy Governor also asked the heads of SBV units to initiate their own emulation movements for the successful accomplishment of the tasks in 2018. However, the emulation movements should have a practical themes and contents, linked to the political and professional tasks of each unit and the banking sector.
Recognizing the excellent performance of the agencies and the individuals in the Banking sector, Prime Minister Nguyen Xuan Phuc, on behalf of the Party and State, presented the Second-class Labor Medals to Governor Le Minh Hung of the State Bank of Vietnam, Mr. Pham Thanh Ha, Director General of the Monetary Policy Department, Mr. Hoang Xuan Que, Director General of the Administration Department, Mr. Nguyen Ngoc Canh, Director General of the Foreign Exchange Management Department; and awarded the Third-class Labor Medals to Mrs. Nguyen Thuy Hanh, Deputy Director of the Credit Department, Mrs. Nguyen Thi Bich Van, Deputy Director of the Finance and Accounting Department, and Mr. Trinh Quang Khai, Deputy Editor-in-Chief of the Banking Times.
Mr. Vuong Dinh Hue, Deputy Prime Minister awarded the Emulation Flag of the Prime Minister to the agencies of: the Department of Legal Affairs, the International Cooperation Department, the Issue and Vault Department, the SBV Office, the SBV Branch in Ben Tre province, the SBV Branch in Gia Lai province, the SBV Branch in Quang Nam province, the SBV Branch in Quang Ninh province, the SBV Branch in Son La province, the SBV Branch in Thua Thien Hue province, and the SBV Branch in Hai Phong province.
Prime Minister Nguyen Xuan Phuc presents the Second-class Labor Medals to several individuals
Deputy Prime Minister Vuong Dinh Hue awards the Emulation Flag of the Prime Minister to the agencies
The PM praised the SBV’s successful management in 2017
Speaking at the conference, Prime Minister Nguyen Xuan Phuc spoke highly of the SBV’s successful management, reflected through the six main points of:
Firstly, the SBV managed the monetary policy in an active, flexible and effective manner, thereby maintaining the stability of the money market, continuing to curb the inflation at 3.53%, which was lower than the target level set by the National Assembly; hence, creating room for the Government to adjust the prices of state-managed commodities and creating favorable conditions for the fiscal policy and other macro policies to take effect, formulating the basis for maintaining the macro-economic stabiliity and controlling the inflation at a low level in the medium and long-terms.
Secondly, the SBV managed the exchange rates, the money and gold markets in a flexible manner, thereby facilitating the exports, effectively implementing the objectives of anti-dollarization and anti-gold-hoarding.
Thirdly, the banking sector continued to promote its role in providing funds to the economy. The total credit outstanding by the end of 2017 was VND 6,500 trillion, an increase of 18% from last year. It means that the banking sector provided an additional VND 1,200 trillion to the economy in 2017. This result was a significant contribution to boost the 2017 economic growth rate to 6.81%, higher than the target level. The credit financing focused mainly on the priority fields through the preferential credit programs, supporting directly the key sectors of the economy. The credit financing for high-tech enterprises in the agriculture sector, the support industries, the exports, SMEs, etc. all had high growth rates. The credit financing for risky sectors (securities, real estate, etc) was controlled strictly.
Fourthly, the restructuring of the credit institution system and the NPL settlement - the second phase (2016-2020) was seriously implemented by the banking sector right from the beginning of the term of office. The banking sector actively formulated and submitted to the Government the Scheme on restructuring the credit institution system associated with the NPL settlement, and proactively recommended to improve the legal framework to accelerate the restructuring process. As a result, the two important legal documents were approved and passed by the National Assembly, namely Resolution 42 on pilot settlement of the NPLs and the Law on amendments and supplements to the Law on Credit Institutions.
The initial results of the restructuring and NPL settlement have helped the banking industry to continue to maintain the stability and to prevent the risks of systemic insecurity, and to gradually improve the operational situations of the weak credit institutions; at the same time, facilitating joint-stock commercial banks to enhance their services and improve their competitiveness, thereby, continuing to strengthen the public confidence in the banking sector and contribute greatly to the overall restructuring of the economy.
Fifthly, the administrative reforms and the improvement of the business environment in the banking industry continued to achieve many encouraging results, facilitating enterprises and individuals to access easily bank loans and the banking services. Therefore, for the indicator of “credit access”, Vietnam now ranks the fourth in ASEAN. 2017 is the second consecutive year the SBV has taken the lead among the Government ministries and agencies in terms of the administrative reform indicators.
Sixthly, the system of commercial banks implemented promptly and effectively the social protection activities; the communications by the SBV were conducted successfully through regular press conferences with a view to providing the society with information about the monetary policy management and the banking operations to make sure the public understands and have confidence in the banking sector.
However, the PM also pointed out several limitations of the banking industry, such as the slow process of NPL settlement and the restructuring of the credit institutions, the lack of determination of several credit institutions in formulating roadmaps and measures for restructuring, as well as business development strategies, etc. In order to address these limitations, the PM required the banking sector to implement six key tasks, specifically as follows:
First, continue to manage effectively the monetary policy and the exchange rates in harmonization with the fiscal policy and other macro policies to achieve the objectives of stabilizing the macro-economy and curbing inflation.
Second, continue the credit expansion with a focus on priority development areas, while develop the credit market for consumption and micro-finance in order to promote production; continue to strictly control credit for the risky areas.
Third, concentrate the resources to implement the Scheme on restructuring the credit institution system associated with the NPL settlement, helping well-performing credit institutions to consolidate and improve their capacity and operational efficiency.
Fourth, continue to enhance the efficiency and effectiveness of the management, inspection and supervision of the SBV in order to promptly detect and minimize any violations, especially serious violations in the monetary and banking operation, contributing to the enhancement of the public confidence in the banking system.
Fifth, develop and apply modern banking products and services to keep pace with the new development trends of the fourth industrial revolution (4IR), while focusing on ensuring the security and safety in order to limit risks and crimes from the negative side of the digital technology; Continue to implement the non-cash payment scheme; implement the scheme on improving the legal framework for the management and handling of various types of virtual assets, electronic money and virtual money; Promote the communication and financial education to raise the public awareness and encourage the people to use financial and banking services safely and effectively; Promote the implementation of projects to increase the resilience of the banking system to systemic risks.
Sixth, accelerate the administrative reforms, especially the administrative procedure reform; Enable enterprises and individuals to access banking services; Create favorable conditions for business and investment activities and encourage start-ups to improve competitiveness.
In responding to the PM’s opinion, the SBV Governor expressed his sincere thanks for the attentions of the PM toward the banking industry. On behalf of whole banking officials, civil servants and employees, the Governor promised that all of the banking sector would not stop striving for, and determining to ensure the successful accomplishment of the Prime Minister’s instructions and the assigned tasks in 2018.
VA-LH