On December 27, 2022, in Hanoi, the State Bank of Vietnam (SBV) organized a Press Conference under the chair of First Deputy Governor Dao Minh Tu to disseminate the results of the monetary policy management and the banking operations in 2022, as well as the orientations for 2023.
First Deputy Governor Dao Minh Tu speaks at the Conference
Making the best efforts to overcome the challenges
Speaking at the Press Conference, First Deputy Governor Dao Minh Tu informed that, 2022 had been a particularly difficult year with many differences from the past years. The world had witnessed unprecedented uncertainties and challenges, with the complicated developments of the COVID-19 pandemic, the Russia-Ukraine conflict, and their consequences such as the disruptions of the global supply chains, the hikes in the prices of commodities and raw materials, high inflation rates around the world as well as the monetary policy tightening. Those risks have directly affected Vietnam’s macro-economic management in general and the monetary policy management and banking operations in particular.
In response to those unprecedented developments in the world and domestic economies, the SBV has proactively monitored the macro-economic situations to promptly adjust the policies, promulgate and implement consistent measures and instruments, contributing to maintaining the macro-economic stability, controlling the inflation at a low level, supporting the economic recovery and ensuring a prudent banking industry.
In the first 8 months of 2022, the SBV had continued to remain the key interest rates in the context of rapid increases of the world interest rates and the inflation pressures in the domestic economy, thereby, enabling the credit institutions to access the SBV’s capital resources with low interest rates. However, facing unprecedented developments in the world economy, the SBV had twice raised the key interest rates with the total increase of 2% p.a. The maximum VND mobilizing interest rate for time deposits of 1-month to below 6–month terms had increased by 0.8% to 2% p.a. The maximum VND lending interest rate for priority fields had been raised by 1% p.a.
The SBV has directed the credit institutions to cut down on their operational costs, administrative procedures and unnecessary expenses to create more space to reduce their lending interest rates in order to support and accompany the enterprises and the people to overcome the difficulties.
The forex market has been maintained relatively stable, and the exchange rates have been managed in an active and flexible manner in adaption to the uncertain developments and the pressures in the world market. The market liquidity has been ensured for smooth operations, meeting the legitimate demands for foreign currencies, especially for oil and gasoline imports, thereby contributing to maintaining the macro-economic stability and controlling the inflation.
An overview of the Conference
Focusing resources on supporting the economic recovery and development
Based on the credit growth target of 14% for 2022, with the appropriate adjustments in conformity with the practical situations, the SBV has managed the credit growth to support the economic recovery, meeting the capital demands for production and business, while still paying close attention to the inflation risks. The SBV had also directed the credit institutions to extend their credit in a safe and efficient manner, focusing their resources on production and business activities and the priority fields as instructed by the Government; strictly control credit for potentially risky areas, especially investments into corporate bonds, securities, real estate; enable businesses and people to access bank credit resources.
By November 2022, in the context of less adverse external impacts and improved liquidity of the credit institution system, the SBV had decided to adjust the credit growth targets for 2022 with a further increase of 1.5%-2% for the whole system of credit institutions. The principle of increasing the credit growth targets for the credit institutions is in the direction that the credit institutions with better liquidity and lower interest rates had been allowed to have higher credit targets.
The SBV had also requested the credit institutions to balance their capital for the new credit extension, focusing on production and business operations, especially in the priority fields such as agriculture, exports, SMEs, support industries, etc., in line with the Government’s and the Prime Minister’s directions.
With the SBV's synchronous instructions and solutions, as of December 21, 2022, the credit for the whole economy had reached VND 11,780 trillion, up by 12.87% as compared to that of the end of 2021, an increase of about 13.96% as compared to that of the same period in 2021. The credit for potentially risky areas had been controlled. The credit outstanding of 23 policy credit programs implemented by Vietnam Bank for Social Policies (VBSP), as of November 30, 2022, had reached VND 279,732 billion, with more than 6.4 million existing customers, an increase of 12.81% as compared to the credit amount of 2021.
The SBV had proactively coordinated with the Ministries, agencies and the commercial banks to formulate and finalize before submitting to the Government Decree No. 31/2022/ND-CP dated May 20, 2022 on the lending interest rate support package from the State budget for loans to enterprises, cooperatives and household businesses; promulgated several Circulars, Directives and documents; organized Bank-Enterprise Connection Conferences in various cities and provinces; established a hotline to receive feedbacks from enterprises, cooperatives and household businesses, etc.
Moreover, the SBV had continued to conduct a number of urgent measures to resolve the difficulties and support COVID-19 affected borrowers at the credit institutions. The SBV had also provided refinancing resources to VBSP with the interest rate of 0% p.a. without any collateral in order to provide credit to allow employers to pay work suspension benefits and wages to their employees and to recover their production lines in accordance with the Government's Resolution and the Prime Minister’s Decision.
Restructuring strongly the system of credit institutions in association with NPL resolution
The restructuring of the system of credit institutions in association with the NPL resolution has continued to be implemented strongly, obtaining a lot of important results, such as the submission to the Prime Minister for the approval of the Scheme on restructuring the system of credit institutions in association with NPL resolution during the period of 2021 – 2025; the promulgation and implementation of the Action Plan of the banking sector for the implementation of the Scheme.
The SBV has actively directed the credit institutions to speed up the NPL resolution, improve their credit quality, asset quality, and minimize arising NPLs; continued to promote the effective handling of NPLs in accordance with Resolution 42.
The operational stability and safety of the system of credit institutions have continued to be maintained; the NPL ratio on the balance sheet has remained at a safe level. The financial capacity, the governance and management quality, the standards of the credit institution system have all been steadily enhanced, approaching the international practices and in line with the practical conditions in Vietnam.
Promoting digital transformation and cashless payment operations
Regarding the implementation of Decision No. 06/QD-TTg, the SBV had completed the technical trial of connection with the National Population Database for the purpose of anti-money laundering, providing credit information and public services performed by the SBV; coordinated with the Ministry of Public Security and the Ministry of Information and Communications to complete the review and assessment of the safety and security of the public service system.
In addition, most of the credit institutions have already developed and implemented, or been planning to develop and implement their own Digital Transformation Strategy; actively applied new technological achievements to optimize and simplify their business processes, improve their operational efficiency and customer experience in payment operations.
The cashless payment operations in 11 months of 2022 had obtained a high growth rate as compared to that of the same period in 2021, up by 85.6% and 31.39% in terms of transaction number and value respectively; transactions via the Internet increased by 89.36% and 40.55% in term of number and value respectively; transactions via the mobile phone channel increased by 116.1%% and 92.3%; transactions via the QR code channel increased by 182.5% and 210.6%; transactions via POS increased by 13.28% and 14.04%.
The SBV has regularly and proactively monitored and directed the payment service providers and the intermediary payment service providers to strengthen measures to ensure security and safety in the payment operations; implemented communication programs on financial education to disseminate comprehensive information and regulations related to businesses and individuals in order to improve their skills in using banking services...
Orientations for 2023
Regarding the orientations of the monetary policy in 2023, Deputy Governor Dao Minh Tu emphasized that the ultimate political task is to control the inflation, ensure the accomplishment of the objectives as set by the National Assembly, and support the economic growth.
Accordingly, the SBV would continue to closely follow the Resolutions of the Party, the National Assembly, and the directions of the Prime Minister; closely monitor the economic developments and the situations in the world and domestic economies to manage the monetary policy in an active and flexibly manner in close coordination with the fiscal policy and other macro-economic policies, thereby contributing to controlling the inflation, maintaining the macro-economic stability, ensuring the macro balances of the economy, the stability of the money and forex markets, and ensuring a prudent banking system; regulate the interest rates and the exchange rate in accordance with the market situations, the macro-economic developments and the monetary policy objectives.
The SBV would also manage the credit growth in line with the macro-economic developments, contributing to controlling the inflation, supporting the economic recovery and growth; focusing capital resources on production and business operations, especially the priority fields; controlling credit for the potentially risky areas, improve the credit quality; continue to promote the implementation of the assigned tasks in the Socio-economic Recovery and Development Program, the National Target Programs, the credit policies for the poor and the low-income people, etc.
Drastically implementing the Scheme of Restructuring the system of credit institutions in association with NPL resolution for the 2021-2025 period; speeding up the NPL resolution; strengthening the inspection and improving the effectiveness of the macro and micro supervision; improving the management capacity and the efficiency of the credit institutions, etc.
Continuing to review, amend and supplement the legal frameworks, the mechanisms and policies on monetary and banking operations; ensuring safe and sound operations of the money market and the banking sector.
Effectively implementing the Scheme of Cashless Payment Development for the 2021-2025 period; continuing to implement the solutions to promote the digital transformation of the banking operations; ensuring the security and safety of the information technology systems in the banking industry, protecting the legitimate interests of customers, etc.
Le Hang