On January 9, 2019 in Hanoi, the State Bank of Vietnam (SBV) held a video-conference to disseminate the tasks of the banking sector in 2019.
The conference was attended by H.E. Prime Minister Nguyen Xuan Phuc, Colonel General To Lam - Minister of Public Security, Mr. Tran Hong Ha, Minister of Natural Resources and Environment, Mr. Le Thanh Long, Minister of Justice, Mr. Vo Van Dzung, First Deputy Head of the Central Committee of Internal Affairs. Also attending the conference were Governor Sonexay Sitphaxay of the Bank of the Lao P.D.R., who was on a working visit to Vietnam, as well as various senior officials from the Ministries and Government agencies. On the side of the banking sector, there were Governor Le Minh Hung and the other members of the SBV Board of Management, representatives of the SBV Departments and entities, the Directors of the SBV municipal and provincial branches, the Chairpersons of the Boards of Directors of the credit institutions, Vietnam Bank for Social Policies, Vietnam Development Bank, Deposit Insurance of Vietnam, the joint–venture banks, branches of foreign banks in Vietnam, wholly foreign-owned banks, finance companies, etc.
SBV Governor Le Minh Hung delivers speech at the Conference
In his opening speech, SBV Governor Le Minh Hung affirmed that, on the basis of Resolution 01 of the Government, the SBV has been actively cooperating with other ministries and agencies to manage the monetary, credit and banking policies in a proactive, flexible and synchronous manner, thus facilitating other macro-policies, directly contributing to controlling the inflation at a low level, supporting the economic growth at a high level, ensuring the successful implementation of the objectives and assigned tasks. The achievements made by the banking sector have received compliments from the National Assembly, the Government, foreign and domestic specialists as well as the public opinion, specifically in the following areas:
Firstly, inflation and inflation expectations were controlled at a low level. In 2018, the core inflation was basically remained stable at an averagely of 1.48% (it was 1.83% in 2016, and 1.41% in 2017); the average inflation was controlled at 3.54%, reflecting the fact that the management of the monetary policy over the past time has been closely in line with the orientations of inflation control.
Secondly, the common interest rates maintained stable. In the context of increasing interest rates in most other countries, the fact that the SBV could manage to keep stable the common interest rate was a success; as compared to that of other Asian countries of a similar development level like Bangladesh (9.54%), Indonesia (11,07%), Myanmar (13%), Mongolia (20%), the common interest rate in Vietnam was just at an average level. This was the result from enormous efforts of the whole banking sector, ensuring the legitimate benefits of the depositors with proper mobilization interest rates, while maintaining the lending rates at a reasonable level in order to share the difficulties with the individuals and enterprises.
Thirdly, the fluctuations of the exchange rates were unremarkable. Although the exchange rates in 2018 were under strong impacts of various complicated and unforecastable factors, the SBV managed to mitigate those impacts through the management and implementation of the monetary policies in a proactive and flexible manner, taking steps in the set out roadmap in association with professional communication plans; the stability and improvements of the macro-economy also contributed to the stabilization of the Vietnamese dong; the USD supply in the forex market remained stable; the foreign exchange reserves were at a high level, helping the SBV to stabilize the supply and demand of foreign currencies and intervene in the market when needed.
Fourthly, credit growth was kept at a reasonable rate in parallel with improving the quality and effectiveness. By December 31, 2018, the credit growth reached 14%, and this growth has been on a constant decline (in 2016, it was 18.25%, and it was 18.24% in 2017) while the GDP growth rate has been steadily improved, reaching 6.21% and 6.8% in 2016 and 2017 respectively, and in 2018 reached 7.08%. This shows that the credits were used effectively and appropriately allocated.
The SBV has instructed the credit institutions to focus credit finance on production and business, especially those areas that create the driving force for the economic growth; the priority areas (such as agriculture and rural development, which increased by 14.1%, accounting for 23.86% of the total credit outstandings); Credits in the potential risky areas were strictly controlled.
Fifthly, the restructuring of the credit institution system in association with NPL resolution was strongly implemented and achieved positive results, closely in line with the roadmap and the plans, ensuring the stability, safety and healthy operations of the credit institutions.
Recently, the SBV has decided to allow 3 banks (VCB, VIB and OCB) to apply ahead of time the regulation on minimum capital adequacy ratio, Basel II benchmark standard method, and is considering to apply this regulation in 5 other credit institutions, aiming at the target of having at least 12-15 credit institutions applying successfully Basel II by 2020.
The handling of bad debts and the collaterals for the bad debts has also achieved positive results. The ratio of bad debts tends to decrease, both on the balance sheet, the bad debt outstandings at VAMC, and the debts which could potentially become bad debts.
As for the People’s Credit Funds (PCFs) system, the SBV's Board of Management has directed drastically over the past time, focusing on handling with the poor performing credit funds. On that basis, the SBV continued to improve the Scheme on strengthening and developing the PCF system by 2020 and orientations to 2030 under the directions of the Prime Minister.
Sixthly, the legal framework for the monetary and banking operations has been improved significantly, ensuring synchronization, efficiency and feasibility. In the past year, the SBV, within its authority, issued and submitted to the Government and the Prime Minister for promulgation 51 legal documents, among which there were 46 Circulars. The SBV also submitted to the Prime Minister to issue Decision No. 986/QD-TTg dated August 8, 2018 approving the Development Strategy of Vietnam Banking Sector to 2025, with orientations to 2030. At the same time, the SBV also issued the Plan of Action to implement the Strategy. This result has created an improved, more transparent legal corridor, creating a synchronization in the state management of the monetary and banking sector, ensuring the stability and safety of the system.
Seventhly, the payment activities, especially non-cash payments, continued to have a strong development with the application of many new and modern banking products and utilities, the payment amounts and values grew strongly.
It can be said that the payment field has experienced an exciting year in the context of the strong development of science and technology and the Industry 4.0. The banking sector could not stand outside of the trend, and with the focus of providing customer-centered services, a strong application of the Industrial Revolution 4.0 achievements as a decisive factor; Focusing on improving the legal framework in the field of payment to ensure higher suitability with the context of digitalization and the development of Fintech, increasing utilities, enhancing security and safety in the banking sector.
Deputy Governor Dao Minh Tu presents the report at the Conference
Eighthly, the administrative reform in the whole banking system continued to achieve positive results with nearly 100 administrative procedures and 80 out of 257 business conditions having been abolished and simplified. In particular, in the past year, the banking system drastically implemented Resolution No. 19 and Resolution No. 35 and achieved very positive results. The credit institutions also cut down and abolished many dossiers, procedures, fees, ensuring professional and convenient procedures. As a result, the SBV ranked 1st in the Public Administration Reform Index (PAR Index) among the ministries and agencies for the 3rd year consecutively; Vietnam’s "Access to credit" index, which is ranked by the World Bank, is on the same level as the top 2 countries in ASEAN 4.
At the Conference, SBV Deputy Governor Dao Minh Tu presented a brief report on the policy management and the inspection and supervision work in 2018, orientations for the banking operations and management in 2019. There were also report papers presented by representatives of many commercial banks, such as Agribank, Vietcombank, Vietinbank, BIDV, Sacombank, SeABank, Standard Chartered Bank...
Especially, Minister To Lam of the Ministry of Public Security also had a speech about the coordination between the Ministry of Public Security and the SBV in order to successfully implement the economic development targets in 2018 under the directions of the Government and the Prime Minister.
At the conference, Mr. Nguyen Kim Anh - Deputy Governor of the State Bank, First Vice Chairperson of the Emulation and Reward Council of the SBV, announced an emulation movement to successfully accomplish the banking sector's tasks in 2019. Along with striving to successfully accomplish political tasks, the whole banking sector is committed to make the best efforts to fulfill the assigned tasks set out in the Resolutions of the National Assembly and the Government on the major solutions for the implementation of the socio-economic development plan, the State budget estimates for 2019, and the objectives, operational orientations of the banking sector in 2019; at the same time, strengthening the spirit of solidarity, building clean and strong organizations and units.
The SBV Deputy Governor also requested the heads of units to launch emulation movements to successfully accomplish the tasks of 2019 at their units. The emulation movements need to have practical themes and substances, associated with the political and professional tasks of each unit and the whole banking sector.
Deputy Governor Nguyen Kim Anh announced the emulation movement in 2019
Recognizing the outstanding achievements of the collectives and individuals in the banking industry, on behalf of the Party and the State, Prime Minister Nguyen Xuan Phuc awarded the Second-class Independence Medal to the former SBV Deputy Governor Nguyen Dong Tien; awarded the First-class Labor Medals to the SBV Office and the Legal Department; awarded the Second-class Labor Medals to SBV Deputy Governor Nguyen Thi Hong, Mr. Nguyen Van Thanh – Director General of the Organization and Personnel Department, and Mr. Pham Huyen Anh - Deputy Chief Inspector of the Banking Supervision Agency; and awarded the Third-class Labor Medals to Mr. Nguyen Tuan Anh – Director General of the Finance & Accounting Department, Mr. Dao Xuan Tuan - Deputy Director General of the Foreign Exchange Management Department, Mr. Nguyen Ngoc Minh - Deputy Director General of the Foreign Exchange Management Department, Mr. Khuat Duy Tuan - Deputy Director General of the Emulation & Reward Department, Mrs. Nguyen Thi Thu Huong - Director General of 2nd Department of the Banking Supervision Agency, Mr. Bui Minh Thang - Vice Principal of the Banking Training School.
Prime Minister Nguyen Xuan Phuc handed the awards to the collectives and individuals
LH-VA