On June 13, 2019, the State Bank of Vietnam (SBV) organized a meeting chaired by Deputy Governor Nguyen Thi Hong to announce the results of the banking performance in the first six months of 2019 and orientations for the tasks during the remaining months of 2019.
Also attending the meeting were representatives from the Banking Supervision Agency, the Payment Department, the Department of Credit for Economic Sectors, the Monetary Policy Department, the Communication Department, as well as several commercial banks and media agencies.
Implementing Resolution No. 01/NQ-CP of the Government dated January 8th, 2019 and other resolutions from the Government’s regular meetings, the State Bank of Vietnam (SBV) has conducted consistent measures of monetary policy and ensured safe and effective banking operations. Deputy Governor Nguyen Thi Hong said: “Following closely the macroeconomic developments, the SBV has managed the monetary policy in a proactive, flexible, and prudent manner in coordination with the fiscal and the macroeconomic policies, in order to control the inflation in line with the set-out target, supporting the economic growth, stabilizing the money and forex markets”.
Specifically, by June 10, 2019, the total liquidity increased by 5.17% as compared to that of the end of 2018, the liquidity of the credit institutions system was ensured smoothly. In 2019, the total liquidity and credit growth are targeted to increase by 13% and 14% respectively, with necessary adjustments in accordance with the actual situations.
The SBV has managed the common interest rates in line with the macroeconomic and market developments, directed the credit institutions to keep on reviewing and balancing the financial capacity to set up the appropriate lending rates on the basis of the mobilizing interest rates and the potential risks of the loans, ensuring the financial safety in their operations.
In the context of both advantages and disadvantages in the international and domestic markets, the SBV has been administering the central rate in an active and flexible manner in line with the market developments, the macro and monetary balances, and the monetary policy objectives; synchronously coordinating the monetary policy instruments, taking advantage of favorable market conditions to buy a large amount of foreign currencies to supplement the State foreign exchange reserves. Deputy Governor Nguyen Thi Hong emphasized: "The market has been relatively stable, the exchange rates have followed closely the market conditions; the liquidity is ensured, the forex transactions have been done smoothly, all legitimate demands for foreign currencies have been fully and promptly met."
Deputy Governor Nguyen Thi Hong chairs the meeting
In implementing the instructions of the Prime Minister and contributing to the fight against black credit, at the beginning of the year, the SBV Governor issued a Directive to require the credit institutions to implement various measures to share the difficulties with their customers, create better access to bank loans for enterprises and individuals, and conduct appropriate methods to sufficiently meet the legitimate demands of the borrowers and eliminate crimes and offenses related to black credit.
Recently, the SBV Governor has issued Decision No.1178/QD-NHNN promulgating the action plan of the banking system to implement Directive No.12/CT-TTg dated April 25, 2019 of the Prime Minister on preventing and fighting crimes and offenses related to black credit. Accordingly, the Governor has assigned specific tasks and responsibilities to the functional departments of the SBV to take lead and coordinate with the relevant ministries and agencies to fight againts black credit.
Mr. Nguyen Quoc Hung, Director General of the Department of Credit for Economic Sectors, shared that from the start of 2019 to now, the SBV has directed the credit institutions to conduct several measures to remove the difficulties and obstacles for the rice subsector, the pig farming facing disease outbreaks, the pepper industry,…, i.e. debt payment rescheduling, exemption and reduction of lending interest rates, provision of new loans for crop production and transformation, etc.
The SBV has also made a lot of efforts in the administration reforms. According to the ratings in the Public Administration Reform (PAR) Index for 2018 of the ministries, ministerial-level agencies, the People's Committees of the provinces and centrally-controlled cities, the SBV was rated with the highest score of 90.57/100 points and continued to rank first in PAR Index 2018. This has been the fourth consecutive year that the SBV has achieved the first rank in PAR Index. The goal throughout the SBV system is to promote the PAR in association with renovating the services of the banking sector, which is to put the people and the businesses at the center, making clear changes in improving the business environment in the banking operations. All administrative procedure reforms are essentially solutions to increase access to credit, banking and monetary services for businesses and the people in the entire process, the conditions and procedures for borrowing and providing banking services.
Thanks to the decisive and consistent measures, the banking sector has promptly met the capital demands for production and business operations, as well as the legitimate demands of private customers. By June 10, 2019, the outstanding loans provided to the economy increased by 5.75% as compared to the end of 2018. Mr. Pham Thanh Ha, Director General of the Monetary Policy Department said that the credit in the first months of this year focused on production, business and the priority fields under the guidance of the Government; credit for potentially risky areas was controlled strictly.
The SBV has maintained the key interest rates stably, at the same time directing credit institutions to balance their financial capacity to set up the appropriate lending rates. The common interest rates 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.
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Mr.Nguyen Trong Du, Deputy Chief Inspector of the Banking Supervision Agency, speaks at the meeting |
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The restructuring plan of the credit institutions has continued to be strengthened. The restructuring has created stability and safety for the credit institution system. Particularly, the financial capabilities of the credit institutions have been consolidated, their charter capital has increased gradually year by year; the quality of governance and management of the credit institutions have been improved step-by-step in accordance with the international practices; the transparency of the banking operations have been greatly improved.
Speaking at the meeting, Mr. Nguyen Trong Du, Deputy Chief Inspector of the Banking Supervision Agency, shared that, with the directions of the Government and the National Assembly, the SBV, over the past time, has formulated the plan of resolving NPLs in compliance with Resolution 42 and assessed NPLs of each credit institution. On that basis, the SBV has conducted specific handling measures on a monthly and quarterly basis. Especially, the SBV has been synchronously implemented several measures of resolving NPLs in coordination with the measures of controlling and preventing newly-arising NPLs, thereby contributing to improving the credit quality and reducing the NPL ratios at the credit institutions.
About the results of handling with the NPLs in line with Resolution 42, from 2012 to the end of March 2019, the whole banking system resolved in total VND 907.33 trillion of NPLs. In 2018, the system of credit institutions resolved VND163.14 trillion of bad debts, the ratio of bad debts on the balance sheets by end of March 2019 was 2.02%. From August 15, 2017 to March 2019, VND 227.86 trillion of NPLs as determined by Resolution 42 was resolved, of which the bad debts on the balance sheets was VND 117.8 trillion.
In the payment area, beside improving the legal framework and policies on payments, the SBV has implemented synchronously the methods to accelerate non-cash payments, and directed the credit institutions to develop their payment infrastructure, ensuring the safety, security of the transactions via banks and ensuring the interests of the customers; applying the achievements of the Industry 4.0 in the banks’ payment services. In the first five months of 2019, the total number of payment transactions via the Interbank Electronic Payment System reached 64,160,000, with the total transaction value of over VND 35,728,000 billion, an increase of 23.23% in the number of transactions and 17.63% in the transaction value as compared to the same period of 2018.
The infrastructure and technology for non-cash payments continued to be invested with greatly improved quality and performance. By March 31st, 2019, the number of domestic transactions via banks increased by 18.82% as compared to the same period of last year. Many features and utilities have been integrated into bank cards for payment of goods and services.
About the results of electronic payment via the internet and mobile phones until the end of March 2019, Mr. Pham Tien Dzung, Director General of the Payment Department, said that the number of financial transactions via the internet reached more than 101 million, with the transaction value of about VND 4,581 trillion (up by 65.81% and 13.46% respectively as compared to the same period in 2018); the number of financial transactions via mobile phones reached more than 76 million transactions with the transaction value of more than VND 924 trillion (an increase of 97.75% and 232.3% respectively in comparison with the same period in 2018). Commercial banks have applied new and modern technologies to payment activities, promoting modern, safe and convenient forms of payment. Non-cash payments in the public sector have been continuously promoted and expanded.
The SBV has also promoted the communication, knowledge sharing and information dissemination on non-cash payment; has actively built up the content and coordinated with the media to conduct the financial education programs, which have received high evaluation from the public, such as "Smart money", "Smart-kids", the contest "Correct understanding about money" , "Wise money" ... in order to raise the awareness and knowledge, thereby improving the accessibility to banking products for the people, encouraging the use of non-cash payment methods.
Overview of the meeting
Orientations of monetary policy management and banking operations in the coming time
On the basis of the targets set out by the National Assembly and the Government, and the macroeconomic and monetary developments, the SBV will continue to 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, maintain macroeconomic stability, supporting the economic growth, and stabilize the monetary and foreign exchange markets.
The SBV will operate the OMO and regulate the liquidity of the credit institutions at a reasonable level, contribute to the successful attainment of the monetary policy targets; Regulating the compulsory reserve instrument in line with other tools and the developments of the monetary market and the monetary policy targets.
The SBV will also manage the interest rates and the exchange rates in line with the macroeconomic balances and the market developments, as well as the monetary policy targets; synchronously combine the instruments of monetary policy and the methods of market intervention when necessary for the aim of stabilizing the forex market.
The credit management shall be conducted in line with the targets, along with directing the credit institutions to improve the credit quality, focus their credit on production and business, especially on priority fields under the guidance of the Government; creating favorable conditions for enterprises and individuals to access bank loans. The SBV will be strictly controlling the credit flows into potentially risky areas, such as real estate, securities; enhancing the risk management for the BOT, BT transport projects, consumer credit; and administering the lendings in foreign currencies, as well as having an appropriate roadmap to gradually reduce the foreign currency lendings.
The SBV will continue to accelerate the implementation of the Plan of restructuring the credit institutions in association with NPL handling until 2020, focusing on resolving weak credit institutions; Drastically conducting Resolution No.42/2017/QH14 of the National Assembly on resolving NPLs in the credit institution system, striving to reduce the NPL ratio to below 2%.
Accelerating non-cash payments; improving and upgrading the national payment infrastructure; ensuring safety, security of the operations of the national payment systems; enhancing the safety and security in electronic payment transactions; applying international standards of safety and security for the payment system; formulating a legal framework for Fintech enterprises; 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…
Promoting the reform of administrative procedures in the areas of banking operations in order to assist the organizations and individuals coming into administrative transactions with the SBV and the credit institutions; contributing to improving the business environment in the monetary and banking sectors; improving the national competitiveness; promoting the businesses in general and the credit institutions in particular to develop sustainably.
LH