On January 7, 2019 morning, the State Bank of Vietnam organized a press conference on the results of the monetary policy management and the banking operations in 2018, and orientations for 2019. Deputy Governor Nguyen Thi Hong chaired the conference.
Also attending the conference were representatives from the SBV entities, the SBV branch in Hanoi, commercial banks, Vietnam Bank for Social Policies, Deposit Insurance of Vietnam, etc.
An overview of the Conference
The results of the banking operations in 2018
In 2018, following closely with the Resolutions of the National Assembly and the Government, the State Bank of Vietnam (SBV) issued Directive No. 01/CT-NHNN dated January 10, 2018 and Directive No. 04/CT-NHNN dated August 2, 2018 requiring the entire banking sector to implement the monetary policies and ensure safe and sound banking operations in 2018. On that basis, the SBV conducted consistent measures of monetary policy and banking operations in order to obtain the objectives set out from the beginning of the year, thereby contributing remarkably to controlling the inflation, stabilizing the macro-economy, supporting the economic growth at the reasonable level and ensuring a prudent system of credit institutions. The specific results are as follows:
In 2018, the SBV implemented the monetary policy instruments in a synchronous and flexible manner in order to stabilize the money and forex markets, contributing to controlling the inflation at 3.54% and supporting the economic growth rate of 7.08%, the highest level over the past 11 years. By the end of 2018, the total liquidity increased by 12.5% in comparison with that of 2017.
The management of the credit growth was in accordance with the macro balances, meeting the capital demands of the economy in close collaboration with the improvement of the credit quality, focusing on production and business. Thanks to the consistent measures, credit in 2018 increased by 14% as compared to that of 2017. The credit structure continued to be adjusted in a positive way, with credit focusing on production, business and priority fields.
The common interest rates maintained stable in the context of increasing interest rates in the international markets. Accordingly, the SBV managed the interest rates in line with the macro-economic developments; concentrating on regulating and meeting promptly the liquidity demands of the credit institutions, maintaining the inter-bank market interest rate at a reasonable level; decreasing the interest rate for OMO offers from 5% p.a to 4.75% p.a in order to help reduce the costs of the credit institutions; directing the credit institutions to keep on reviewing and balancing the financial capacity to apply the appropriate lending rates aiming at sharing the difficulties with their customers and ensuring the financial safety in their operations. The common interest rates quoted by the credit institutions in 2018 were basically stable; the lending rates were commonly at 6-9% p.a for short-term loans, and 9-11% p.a for medium and long-term loans.
The exchange rates and the forex market were stable and operating smoothly; the SBV continued to buy foreign currencies to increase the state foreign exchange reserves. In 2018, the SBV regulated proactively and flexibly the forex market, managed the central rate in a flexible manner in collaboration with the monetary policy instruments; regulated the liquidity and the VND interest rates appropriately in order to stabilize the market, contributing to controlling the inflation. Thanks to those efforts, the exchange rates and the forex market were stable, the liquidity was ensured, transactions in foreign currencies were done smoothly, the legitimate demands for buying and selling foreign currencies were met fully and promptly. The domestic gold market continued to be stable and fluctuated narrowly in the context of complex fluctuations of the gold price in the international markets.
About the restructuring of the credit institutions in association with the NPL resolution, after over one–year’s implementation of Decision No. 1058, the financial capabilities of the credit institutions were strengthened, their charter capitals increased gradually; the quality of governance and management of the credit institutions were step by step improved in accordance with the international practices; the organizational structure of the inspection and supervision system at all levels was strengthened to prevent possible conflicts of interest; the situation of cross ownership was mitigated. The inspection and supervision were improved, contributing to detecting and handling with the risks and wrongdoings of the credit institutions, pushing them to implement strictly the restructuring in association with the NPL resolution. It was estimated that, by the end of December 2018, the whole banking sector resolved VND 142.22 trillion of bad debts, the ratio of bad debts on the balance sheets was 1.89%, lower than the ratio of 2.46% at the end of 2016 and the ratio of 1.99% at the end of 2017.
In 2018, the banking sector was one of the leading sectors to take advantage of the achievements of the Fourth Industrial Revolution (Industry 4.0), thereby improving the service quality, increasing the utilities for customers, promoting non-cash payments in Vietnam. Electronic payments via the Internet, mobile phones achieved remarkable results, attracting a large number of customers using the services. Some commercial banks have studied, cooperated and introduced new and modern technologies into their payment operations on mobile devices, with the application of biometrics (fingerprints, face, voice recognition,...), uing the Quick Response code (QR Code), card information encryption technology, contactless payment, mPOS technology, etc. These are modern, safe and convenient forms of payment that have been positively received by the consumers. In 2018, the SBV issued the Basic set of Standards for domestic chip cards and the Basic set of Standards for "Technical Specifications of QR Code display from the payment acceptance units in Vietnam” as a basis for the credit institutions, the payment intermediaries to implement in order to enhance the safety, security and utilities for customers in payment.
In addition, the communication work also received special attention from the SBV, with the coordination in producing several television programs and financial education programs such as "Smart Money", "Smart-kids”,... thereby improving the knowledge and reducing the risks for customers when accessing financial products and services, contributing to improving the accessibility to financial products and services, promoting non-cash payments.
Between now and the 2019 Lunar New Year, the SBV will be closely monitoring the situations of cash in every locality, concentrating resources at the highest level to supplement additional reserves, promptly responding to any urgencies and unexpectations regarding the demands. With the current reserves, the SBV guarantees to provide enough cash for circulation in terms of values and the denomination structure in a reasonable manner. The policy of not printing new small denominations for circulation since 2013 has helped save trillions of Vietnamese dongs for the State Budget for the expenses related to money printing, delivery, handling, tallying, shipping and preserving…
Orientations of tasks in 2019
In answering the questions and clarifying the issues of concern for the journalists, SBV Deputy Governor Nguyen Thi Hong said that based on the targets set out by the National Assembly and the Government, and the macroeconomic and monetary assessment in 2019, the SBV will administer the monetary policy proactively, flexibly, cautiously and harmoniously, in coordination with the fiscal policy and other macroeconomic policies in order to control the inflation in line with the target of below 4% on average; closely following the domestic and international macroeconomic developments, the financial and monetary markets, stabilizing the monetary and foreign exchange markets, controlling the growth of thetotal payment and credit facilities according to the set orientations.
The credit management shall be conducted in line with the targets, along with improving the credit quality. The SBV will be strictly controlling the credit flows into potential risky areas such as real estate, securities; enhancing the risk management for the BOT, BT transport projects, consumer credits; and administering the lendings in foreign currencies, as well as having an appropriate roadmap to gradually reduce the foreign currency lendings.
The SBV will also be actively implementing the solutions to manage the foreign currency market and the gold market effectively; continuing to enhance the State’s foreign exchange reserves; actively implementing the measures to restrict the dollarization nationwide, while increasing the confidence in the Vietnamese dongs, contributing to the stabilization of the foreign exchange market and the macro economy.
The SBV will focus on continuing to implement and closely monitor the restructuring of the credit institutions in association with handling with bad debts; at the same time, controlling and improving the credit quality in association with enhancing bad debt resolution based on the market principles; finetuning the legal framework to support bad debt handling and the restructuring of the credit institutions...
Improving the legal framework, mechanisms and policies for non-cash payment development; effectively deploying the Scheme for the development of Non-Cash Payments in Vietnam during 2016 – 2020 issued with the Prime Minister's Decision No. 2545/QD-TTg dated December 30, 2016; and implementing Decision No. 241/QD-TTg dated February 23, 2018 of the Prime Minister approving the Scheme on promoting payments via banks for public services: taxes, electricity, water use, education fees, healthcare and payments for social security programs; promoting card payments via point-of-sale (POS) devices; applying modern technologies and modern payment methods such as quick response code (QR code), encrypted card information, mobile payment, contactless payment; deploying new payment models in the rural and remote areas in association with the development and implementation of the National Financial Inclusion Strategy in Vietnam; and enhancing the electronic payments in the public sector ...
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