On July 15, 2023, in Hanoi, the State Bank of Vietnam (SBV) organized a virtual Conference to review the banking performance in the first half of 2023, and to re-disseminate the tasks of the banking sector for the remaining months of the year. Prime Minister Pham Minh Chinh attended and delivered a keynote speech at the Conference.
Governor Nguyen Thi Hong speaks at the Conference
Determined to overcome difficulties
In her opening speech at the Conference, Governor Nguyen Thi Hong mentioned that, after one year of various difficulties, obstacles and unprecedented events, the banking sector had entered the year of 2023 with a lot of difficulties and challenges, such as the complicated and unpredictable developments in the global and the domestic markets; the tightening of the monetary policies by central banks around the world to control the inflation; the high common interest rates around the world; the default of a number of banks in the U.S and Europe; the difficulties faced by the domestic corporate bond and the real estate markets; etc.
In that context, the banking sector had been tasked to manage the monetary policy in order to control the inflation, maintain the macro-economic stability and stabilize the money and the forex markets, thereby helping to reduce the common interest rates while still maintaining the stability of the exchange rate, implementing measures to remove the difficulties for the economy, etc. According to the SBV Governor, this was a difficult requirement, especially when there was a limited space for the monetary policy, and the money and the forex markets were under strong influence of the psychology of expectations, etc.
Determined to overcome the difficulties, the SBV Board of Management had clearly identified the key issues and policies for its guidance of the entire banking system. The SBV Governor also emphasized that the restructuring of the credit institutions in association with the NPL resolution had continued to be implemented strongly. The promotion of the digital services and the diversification of the banking products and services had received a lot of attention.
Therefore, this Conference had been organized with the objective of identifying clearly the difficulties and obstacles, as well as the causes, thereby coming up with appropriate measures in the coming time in order to support the people and enterprises to recover their production and business operations, supporting the economic growth.
Deputy Governor Dao Minh Tu presents a report at the Conference
Encouraging results in the first half of 2023
Presenting a report at the Conference, Deputy Governor Dao Minh Tu mentioned that, following closely the Resolutions of the National Assembly, the policy of the Government, and the macro-economic situations, in the first half of 2023, the SBV had focused on the strong and consistent implementation of the monetary policy measures and the management of the banking operations.
The SBV Deputy Governor also shared that, in the first half of 2023, the SBV had operated the monetary policy in a flexible and active manner, contributing to controlling the inflation, maintaining the macroeconomic stability and supporting the economic growth.
About the management of the interest rate, in order to remove the difficulties for the economy, the enterprises and the people, the SBV had reduced the key interest rates four times, by a total of 0.5% to 2% p.a. Thanks to the determination and the efforts of the entire banking sector, the common interest rates have been on a downward trend. As of the end of June 2023, the mobilization interest rates and the average lending interest rates applied to new transactions in VND had decreased by 1% p.a. as compared to those of the end of 2022. In addition, the commercial banks had proactively adjusted and conducted preferential credit packages/programs to reduce the lending interest rates by a total of 0.5% to 3% p.a. applied to new loans.
About the exchange rate management, the SBV had followed closely the market situations to operate the exchange rate in a flexible and appropriate manner in consistency with the monetary policy tools in order to maintain the stability of the forex market, contributing to controlling the inflation and maintaining the macro-economic stability. The liquidity had been ensured for smooth operations and the legitimate demands for foreign currencies had been fully met. The SBV had bought foreign currencies from the credit institutions to supplement the state foreign currency reserve.
About the credit management, right from the beginning of 2023, the SBV had granted the credit growth targets to the credit institutions and directed them to focus credit on production and business operations, the priority areas and sectors, and the drivers of the economic growth in accordance with the Government’s policy; strictly control credit for potentially risky areas; implement measures of creating favorable conditions to facilitate the people’s and businesses’ access to bank loans; diversify the banking products and services; simplify the lending procedures; etc.
As of June 30, 2023, the loan outstanding of the whole economy reached VND 12,490 trillion, up by 4.73% as compared to that of the end of 2022. The credit for the potentially risky areas had been controlled.
An overview of the Conference
The banking supervision and inspection activities had continued to be strengthened. Related to the restructuring of the credit institution system in association with the NPL resolution, the SBV had continued to implement the tasks and solutions as stated in the Scheme on restructuring the credit institution system in association with the NPL resolution for the 2021-2025 period (Scheme 689).
The digital transformation and the cashless payment had continued to be further enhanced. The legal frameworks for payment operations and the digital transformation had been continuously improved. The whole banking sector had actively implemented the Scheme on Cashless Payment Promotion in the 2021-2025 period, and the Plan for the Digital Transformation of the banking sector by 2025, vision to 2030. The cashless payment had continued to achieve positive results.
Implementing Decision No. 06/QD-TTg dated January 6, 2022 of the Prime Minister, the SBV had issued the Implementation Plan of the banking sector for 2023. The banking sector had also actively developed plans, connected and exploited the population information in the National Database on Population, the chip-based ID cards, the electronic identification (VNeID) in support of the public services, the provision of credit information, and the anti-money laundering, as well as to support the socio-economic development.
In addition, the SBV had continued to focus on improving the legal frameworks, the mechanisms and policies, contributing to ensuring the safety of the banking system, and gradually catching up with the international standards.
Toward the end of the Conference, representatives from Vietnam Banks’ Association and several credit institutions expressed their agreement with the report on the banking performance in first half of 2023, and the tasks of banking sector during the remaining months of the year. Besides, they also raised a number of ideas and suggested several solutions for the implementation of the tasks of the banking sector in the remaining months of 2023.
Le Hang