On January 8, 2018, the State Bank of Vietnam (SBV) organized a press conference on the Banking Performance Review in 2017 and orientations for 2018. The press conference was chaired by Deputy Governor Nguyen Thi Hong, with the participants being senior representatives from the SBV Departments, the SBV branch in Hanoi, the commercial banks, the Vietnam Bank for Social Policies, the Deposit Insurance of Vietnam, etc.
Mr.Pham Thanh Ha briefs of the management of monetary policy in 2017
The results of banking performance in 2017
At the press conference, Mr. Pham Thanh Ha, Director General of the Monetary Policy Department, and Mr. Tran Van Tan, Deputy Director General of the Credit Department, said that in 2017, the SBV conducted the monetary policy instruments in a synchronous and flexible manner to stabilize the money market, thereby helping to curb the inflation, facilitate the credit institutions to reduce their lending rates and strengthen the capacity of providing credit to the economy, supporting the economy to grow at 6.81% (the highest level for ten years and higher than the target level of 6.7%). The total liquidity (M2) was estimated to increase by 16%, close to the target level of 16%-18% set from the beginning of the year.
The banking sector continued to conduct measures of cutting down the lending rates with the aim to supporting the businesses and the economic growth. In the context of the increasing pressures on the interest rates for the first six months of 2017, the SBV made the best efforts to manage the monetary policy to ensure the liquidity for the credit institutions, maintain the inter-bank interest rates at a reasonable level, thereby helping to stabilize and reduce the common interest rate. From July 10, 2017, in order to boost the economic growth, the SBV cut down the key interest rates and the short-term lending ceiling rate for priority fields by 0.5% p.a and 0.25% p.a respectively. As a result, the credit institutions reduced their short-term lending rates by 0.5% p.a for priority fields; actively cut down the lending interest rates through a number of credit programs focusing on business development support with lower lending rates than the ceiling rate set by the SBV (lower by 0.5-1% p.a); reduced the lending rate to 8% p.a applied to several programs on medium and long-term loans for priority fields; diversified the short-term and long-term credit packages with the preferential rates for key sectors for economic development and social protection; applied short-term rates of 4-5% p.a for customers who have strong and transparent financial statuses and high credit ratings.
Mr.Tran Van Tan briefs of credit activities in 2017
The banking sector conducted effectively the credit extension in parallel with the safety of credit quality, ensuring capital provision to the economy, facilitating businesses to access to bank loans. Thanks to the synchronous implementation of various measures, the credit flow was unfrozen and expanded positively from the very early 2017, supporting the economic growth (by December 31, 2017, the credit increased by 18.17%). Notably, the credit focused mainly on production and trading (accounting for about 80% of the total loan outstandings), of which the credit for several priority fields as directed by the Government grew significantly. The credit for risky sectors such as real estate and securities was controlled strictly. Specifically, by the end of November, 2017, the credit for export rose by 14.03% as compared to that of 2016 year-end; the credit for high-tech enterprises was up by 20%; the credit for priority industrial sectors increased by 22.13%; the credit for SMEs went up by 11.53%; the credit outstanding for agriculture and rural development rose by 22%, etc.
In 2017, the SBV continued to manage the central rate of the VND against the USD in a flexible manner; in the context of abundant resource of foreign currencies, the SBV adjusted flexibly the buying rate in line with the market developments to buy foreign currencies for the State foreign reserve. At the same time, the SBV utilized flexibly the monetary policy instruments to maintain the interest rate difference between the VND and the USD at the reasonable level, managed the VND liquidity to support both the exchange rate stabilization when necessary and the stability of the interest rate in Market 1. According to Bloomberg’s assessment, the Vietnamese dong (VND) was rated as one of the most stable Asian currencies. The market liquidity was ensured, the legitimate demand for foreign currencies of the economy was met fully and promptly, the credit institution system made net purchase of a large volume of foreign currencies from institutions and individuals, thereby can sell to the SBV to supplement the State foreign reserve.
With the consistent measures, flexible management of gold trading in accordance with Decree No. 24/2012/ ND-CP, up to now, the gold market has been continuing to develop sustainably. From early 2017 to now, the gold prices in the domestic market have been relatively stable and developed within the narrow margin in spite of the complicated fluctuations of the world gold prices. The demand for gold bullions gradually declined; the sales of gold bullions remained at a low level. There was no speculation affecting the exchange rates, the forex market and the macro-economic stability. A part of capital resources in gold was utilized for socio-economic development.
Overview of the press conference
Orientations for 2018
Answering the questions and clarifying issues of the correspondents’ concerns, Deputy Governor Nguyen Thi Hong said: Based on the guidance of the National Assembly, the direction of the Government and the macroeconomic assessments, the State Bank of Vietnam will continue to implement the monetary policy proactively and flexibly in 2018, while closely coordinating with the fiscal and other macro-economic policies in order to stabilize the macro-balances, control the inflation and support the economic growth at a reasonable level. The following key solutions will be focused on for implementation:
Synchronously and flexibly implementing the monetary policy instruments to stabilize the money market, to help control the inflation, and to strive to reduce the lending interest rates to fit in the macro-economic conditions on the basis of ensuring the safe and sound financial operations.
Continuing to manage proactively and flexibly the exchange rates in line with the market situations, the macro-economic balances and the monetary policy objectives; stabilizing the foreign exchange market and continuing to increase the foreign exchange reserve when the market is favorable; continuing to perform well the role of state management for the gold market.
Operating the credit control towards rational credit growth, contributing to realization of the inflation control target, supporting growth, improving the credit quality, and actively managing the credit in some risk-prone sectors; Promptly handling difficulties and problems related to mechanisms and policies with a view to facilitating the CI system to expand the credit for economic development along with the operation safety; Continuing to implement the credit programs and policies for a number of sectors and industries to support CIs in extending credit effectively, credit restructuring, and social security support.
Accelerating the restructuring of credit institutions along with resolving Non-Performing Loans, including solutions, such as:
(i) Improving the legal framework, the mechanisms and policies on monetary and banking operations, especially advising competent authorities to promulgate policies, regulations and mechanisms to support the restructuring process associated with the handling of Non-Performing Loans of credit institutions, regulations on dealing with cross-ownership issues (in which, focusing on the guiding documents of the Law on amendments and supplements a number of Articles of the Law on Credit Institutions in 2010); (ii) Focusing on the quality and timeliness of assigned tasks in the Action Plan of the banking sector to implement the Project "Restructuring the credit institutions system associated with dealing with bad debts in the period 2016-2020" and Resolution No.42/2017/QH14 on the pilot program of NPL resolution of credit institutions; (iii) Continuing to enhance innovation and efficiency of the banking inspection and supervision work in line with the practical requirements of Vietnam and international practices and standards.
Continuing to improve the legal framework for payment activities in the economy; efficiently implementing the Scheme on development of non-cash payment in Vietnam, period 2016-2020; Developing the banking technologies and payment services; improving efficiency and safety in the payment system of Vietnamese banks; Step by step building, deploying and applying basic technical standards for the information technology infrastructure and the information systems of the banking industry in accordance with the international practices and standards.
Effective implementing 6 areas of the Public Administration Reform (PAR) in accordance with the Government Resolution 30c/NQ-CP on PAR for the period 2011-2020, focusing on reforming the institutions, the administrative procedures, developing and improving the quality of personnel, state officials and civil servants; focusing on the implementation of the e-Government in line with Resolution No.36 / NQ-CP…
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