SBV Governor Le Minh Hung: Banking sector will decisively resolves NPLs to unlock capital resources for serving production and business

The online meeting was chaired by SBV Governor Le Minh Hung, Deputy Governor Nguyen Phuoc Thanh and Deputy Governor Nguyen Kim Anh, Deputy Governor Dao Minh Tu.

The meeting was attended by top-level leaders of National Assembly (NA) Committee for Economics, NA office, Government office, Ministry of Public Security, Ministry of Justice, representatives from agencies located in Hanoi, heads of SBV departments, SBV branches, Chairman of Boards of management, CEO of commercial banks, Joint-venture and wholly foreign-owned banks, financial companies and financial leasing companies, etc.

Previously, at the Third Session of NA XIV, deputies approved Resolution No.42/2017/QH14 on pilot program of NPL resolution of credit institutions (hereafter called Resolution No.42). On July 19, 2017, Prime Minister issued Directive No.32/CT-TTg (hereafter called Directive No.32) on the implementation of Resolution No.42 and Decision No.1058/QĐ-TTg on approving the scheme to restructuring system of credit institutions in combination with NPL resolution in the 2016-2020 periods (hereafter called Scheme 1058). In order to implement Directive No.32 of Prime Minister, SBV Governor issued Directive No. 06/CT-NHNN on the Implementation of Resolution No.42 and Scheme 1058.

SBV Governor Le Minh Hung delivered the keynote speech at the meeting.

Governor Le Minh Hung stated that, over the first six months of the year, in spite of complicated movements of international and domestic economy, the SBV has regulated monetary policy in a flexible manner, thereby maintaining the stability of monetary market, contributing to macro-stability, controlling inflation and supporting proper economic growth. Concurrently, in order to implement Resolution 42 of NA and Decision 1058 of Prime Minister, the SBV organized online meeting to thoroughly communicate major substances of Resolution and Scheme, directing promptly and decisively the upcoming tasks and solutions to deploy drastically and efficiently.

Decrease interest rates; concentrate credit on production and business

Implementing Resolution No. 01/NQ-CP dated January 1, 2017 on the major tasks and solutions on implementing plan of social-economic development and state budget estimation of 2017, the SBV issued Directive No.01/CT-NHNN dated January 10, 2017 on implementation of monetary policy and assurance of safe and effective banking operation in 2017. In accordance with the macroeconomy and monetary movements of 2017, the SBV continued to operate monetary policy in active and flexible manner in combination with fiscal policy and other macro-economy policies to control inflation in line with the set targets (averagely around 4%), stabilizing macroeconomy, thereby contributing to support the economy growth at proper level (about 6.7%), while ensuring liquidity of credit institutions, stabilizing money market. The total liquidity and credit growth are targeted to increase by 16-18% and 18% respectively with flexible adjustment in line with the practical movement.

By June 30, total liquidity increased by 6.82% as compared to that of end of 2016, supporting the regulation of targeted inflation in the context that the prices of state managed commodities continued to be adjusted in accordance with the roadmap; Interest rates were maintained stable in the first six months, despite pressure from the high inflation at the end of 2016 and earlier 2017 still remained, credit grown right from beginning of the year, government bonds were continued to be issued at large volume, the foreign exchange market suffered pressure from the raise of interest rates by Federal Reserve.

Basing on the capacity of controlling inflation and facilitating business and production of enterprises, since July 10, 2016, the SBV promptly directed credit institutions to decrease lending rate by 0.5% for short-term loans for priority fields, therefore, the rates were commonly 6 % - 6.5% p.a for short-terms, and 8-10% p.a for medium- and long-term ordinary loans; the lending rate for short-term loans was 4-5% p.a, applicable to those customers who have good loan-repayment track records, as well as strong and transparent finances. Banking system implemented various credit measures, created favorable conditions for credit growth right from beginning of the year to serve economic growth.

As a result, credit growth remained consecutively and steadily increased since the beginning of the year; finishing the situation that credit increased very little in the first months and accumulated growth in the last months of the year. By June 30, 2017, credit was estimated to grow by 9.06% in comparison with the previous year and was higher than that of the same period of recent years while credit quality was well ensured. Credit was allocated with more focus on production and business, of which, credit for key sectors increased at higher level than the common raise of the whole system; while slowing down credit for risky fields. Exchange rate and forex market was stable despite Fed’s interest rate increase, and trade deficit; market liquidity was improved, the legitimate demand of individuals and organizations were met promptly and adequately, the SBV bought foreign currencies to raise the state international reserves. Rrestructure of credit institutions and bad debt resolving were decisively implemented, thereby NPL was controlled fewer than 3%, and operations of credit institutions were ensured safe and sound.

Banking sector determines to implement effectively the National Assembly’s Resolution and Prime Minister's Decision

At the meeting, Mr. Tran Dang Phi, Deputy Chief Inspector of Banking Inspection and Supervision Agency and Mr. Doan Thai Son, Director General of Legal Department of the SBV presented several major contents of the Resolution and Scheme, concurrently reported several results of restructuring system of credit institutions in combination with NPL resolution over the past time. It is noticeable that, on the basis of the request from SBV, courts, credit institutions and VAMC, the Supreme People’s Court issued Document No.152/TANDTC-PC on guiding for settlement of disputes relating to collateral assets of credit contract.

Representatives of commercial banks including Agribank, Vietinbank, Techcombank, etc briefed their performances on restructuring and bad debt resolving. They also raised their questions and proposals to push ahead the efficiency of implementing the tasks assigned by the NA and Prime Minister.

In conclusion, Governor Le Minh Hung emphasized: Basically, Resolution No.42 was for the aim of resolving difficulties and problems in implementing the legal regulations on solving bad debt, collateral assets of credit institutions, VAMC, which were reported to the Government and NA by the SBV in order to ensure legal creditor rights for credit institutions, VAMC as well as accelerating the progress of solving bad debt in the banking sector, ensuring the safe and sound operations of banking sector in particular and economy in general.

The Governor also assigned the specific tasks for SBV entities, credit institutions, foreign bank branches to accelerate Resolution of NA and Scheme 1058 of Government in order to decisively resolve NPLs to unlock capital resources for production and business, supporting for economic development.

Thoa Le