On December 31, 2019, the State Bank of Vietnam (SBV) organized a press conference on the results of the monetary policy management and the banking operations in 2019, and the orientations for 2020. Deputy Governor Nguyen Thi Hong chaired the conference.
Also attending the conference were representatives from the SBV entities, several SBV branches, commercial banks, Vietnam Bank for Social Policies, Deposit Insurance of Vietnam, etc.
Implementing the Government’s directions in Resolution No. 01/NQ-CP, the SBV issued Directive No. 01/CT-NHNN dated January 8, 2019 providing comprehensive instructions for the banking operations. Following closely the macro-economic developments in 2019, the SBV managed the monetary policy in an active, flexible and prudent manner in close coordination with the fiscal policy and other macroeconomic policies to control the inflation at the set level, stabilizing the macro-economy, supporting the economic growth at a reasonable level, and ensuring a prudent system of credit institutions.
Stable common interest rates and exchange rates – Efficient credit growth
In 2019, 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 average core inflation at 2.01%. By the end of 2019, the total liquidity increased by about 13% in comparison with that of 2018; the liquidity of the whole banking sector was ensured, meeting the demand for payment of the economy.
About the management of the interest rates, the SBV followed closely the Government’s directions and the market developments to conduct measures of facilitating enterprises and individuals to get access to bank loans for production and business. On September 16, 2019, the SBV reduced the key interest rates by 0.25% p.a; on November 19, 2019, the maximum mobilizing interest rates were lowered by 0.2-0.5% p.a for below 6- month terms, while the maximum lending interest rate declined by 0.5% p.a for the priority fields; the interest rates in the OMOs decreased by 0.75% p.a.
Overview of the conference
The exchange rates were stable and the liquidity was abundant; the legitimate demands for foreign currencies were met fully and promptly. In 2019, the SBV bought a large amount of foreign currencies to supplement the state foreign exchange reserves.
About credit management, credit continued to be controlled strictly, focusing on production, contributing to renovating the growth models, meeting the legitimate capital demands, limiting “black” credit. Credit in foreign currencies continued to be controlled in line with the roadmap to restrict the dollarization; credit for potentially risky fields was controlled at a reasonable level.
In addition, the SBV also paid much attention to the administrative procedure reform. In 2019, the SBV achieved the first rank out of the central Government ministries and agencies in the Public Administration Reform (PAR) Index for four consecutive years.
By the end of 2019, credit increased by over 13% as compared to the end of 2018. The credit structure continued to have positive adjustments, focusing on production, business and the priority areas. By December 31, 2019, it was estimated that credit for agriculture and rural areas increased by about 11% in comparison with the end of 2018, accounting for about 25% of the total loan outstandings; credit for small and medium enterprises increased by about 16%, credit for high-tech enterprises rose by about 15%.
Mr. Pham Tien Dzung, Director General of the Payment Department, speaks at the conference |
Ms. Le Thi Thuy Sen, Director General of the Communication Department, speaks at the conference |
Mr. Pham Chi Quang, Deputy Director General of the Monetary Policy Department, speaks at the conference |
Ms. Ha Thu Giang, Deputy Director General of the Department of Credit for Economic Sectors, speaks at the conference |
Mr. Nguyen Trong Du, Deputy Chief Inspector of the Banking Supervision Agency, speaks at the conference |
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Positive changes in the restructuring of credit institutions system in association with NPL resolution
The restructuring of credit institutions also continued to be strengthened. With the SBV’s drastic instructions and the efforts of credit institution system, by December 2019, it was estimated that the NPL ratio of the whole credit institution system was 1.89% (within the set-out target of below 2%). From 2012 to the end of December 2019, the whole credit institution system resolved VND 1,064 trillion of bad debts. Accumulated from August 15, 2017 to the end of December 2019, it was estimated that the whole credit institution system resolved VND 305.7 trillion of bad debts as determined in line with Resolution 42 (excluding the use of risk provisions and debts sold to VAMC through the issuance of special bonds). On average, from August 15, 2017 to December 2019, the whole banking system resolved about VND 10.5 trillion per month, VND 4.9 trillion higher than the average NPL resolved between 2012 and 2017, before the effective date of Resolution 42.
Implement synchronously solutions to promote non-cash payments
Concerning the legal basis in the field of payment, the SBV followed closely the actual situations, proactively and promptly coordinated with the relevant ministries and agencies to survey and propose to the Government to formulate a new Decree on cashless payments; submitted and implemented a Regulatory Sandbox for Fintech; Reported on the pilot mechanism of P2P Lending in Vietnam, etc. At the same time, the SBV also instructed the credit institutions to continue to invest in and develop the payment infrastructure, apply the innovations of I.R 4.0, etc. In the payment field, all new and available technologies in the world have been applied in Vietnam (ATM, POS, Internet Banking, Mobile Banking, QR Code, Tokenization,...). By the end of October 2019, there were over 78 payment service providers implementing payment services via the Internet and 47 providers conducting payment services via mobile phones. In the first 10 months of 2019, the number and value of financial transactions via the Internet increased by over 67% and over 36% respectively; the number and value of financial transactions via mobile phones rose by 186% and 221% respectively as compared to the same period of 2018. Payments via QR code also gained good growth.
In addition, the communication work about non-cash payments also received special attention from the SBV and was conducted effectively. Over the past time, the SBV has proactively developed the content and formulated several financial education programs, such as "Smart Money", "Smart-kids”, “Wise Money”,... 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.
Orientations of managment of monetary policy and banking operations in the coming time
In answering the questions and clarifying the issues of concern raised by 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 assessments in 2020, 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; stabilize the macro-economy, support the economic growth at a reasonable level, stabilize the money and forex markets. The SBV will continue to focus on implementing the following key measures in 2020:
Operating the OMOs, regulating the liquidity appropriately to support the stability of the money market, realizing the monetary policy objectives; Operating the compulsory reserve tools in association with other monetary policy instruments in accordance with money market developments and monetary policy objectives; Managing the interest rates and the exchange rates in line with the macro balances, the inflation, the market movements and the monetary policy targets in order to stabilize the market, increase the State foreign exchange reserves.
SBV Deputy Governor Nguyen Thi Hong answers questions raised by the journalists
Directing the credit institutions to improve credit quality; focusing credit on production and business, especially the priority areas under the Government's policy, creating favorable conditions for enterprises and people to access bank loans, contributing to limiting black credit; Strictly controlling credit for risky areas; Controlling loans in foreign currencies and having an appropriate roadmap to gradually reduce loans in foreign currencies.
Continuing to promote and effectively implement Resolution No. 42/2017/QH14, Decision No. 1058/QD-TTg; Studying and proposing measures of restructuring the credit institutions in association with NPL resolution for the 2021-2025 period; Striving to bring the NPL ratio to below 2%; closely coordinating with the ministries and agencies to promptly remove the difficulties and obstacles in the application of measures to handle with bad debts in accordance with Resolution 42.
Concerning payment operations: Continuing to formulate and improving the legal framework, focusing on meeting the practical requirements and the development trends based on the IT development, especially for digital banking and digital payment; promoting non-cash payments; continuing to research and develop payment solutions in the rural and remote areas associated with the implementation of the National Strategy on Financial Inclusion in Vietnam; strengthening the coordination with the ministries and agencies to effectively implement the tasks and solutions to promote electronic payments; promoting payments of public services via banks; enhancing the information and communication on non-cash payments, financial education; strengthening measures to protect consumers' rights, and to improve the quality and efficiency of payment services ...
Promoting the administrative procedure reform in banking operations, facilitating organizations and individuals in administrative transactions with the SBV and the credit institutions, contributing to improving the business environment in the banking sector and the national competitiveness; promoting businesses in general and the credit institutions in particular to develop sustainably.
Le Hang