At the meeting between the Government’s Standing Committee with the joint stock commercial banks on possible solutions to boost the socio-economic development on September 21, 2024, Deputy Governor Pham Quang Dzung of the State Bank of Vietnam (SBV) made a report on solutions to manage the monetary policy and the banking operations, promoting the role and contributions of the private joint stock commercial banks.
Deputy Governor Pham Quang Dzung speaks at the meeting. Photo: VGP/Nhat Bac
Reporting at the meeting, Deputy Governor Pham Quang Dzung said that, over 8 months of 2024, closely following the directions of the National Assembly, the Government and the Prime Minister, the SBV had proactively monitored the international and domestic economic developments to deploy synchronized measures to create favorable conditions for businesses and people to access bank loans, remove difficulties, and restore production and business operations, contributing to promoting the economic growth in association with maintaining the macro-economic stability, controlling the inflation, and ensuring a prudent banking system.
Credit has been improved
Regarding the credit extension, according to the SBV Deputy Governor, the credit growth of the entire banking system had been improved as compared to that of the same period in the previous year. As of September 17, 2024, the credit growth reached 7.38% as compared to the end of 2023 (and by 5.73% against the same period of the previous year), of which, the credit growth of the private joint stock commercial banks (accounting for 45% of the market share) increased by 8.6%, the highest increase in the entire banking system.
The credit growth for all sectors had been improved as compared to the same period of 2023; the credit structure had been in consistency with the orientations of the economic restructuring. Credit continued to be focused on production and business activities, the priority sectors. The loan outstanding for living needs and the loan outstanding on credit cards increased by 4.93% (down by 0.2 % against the same period of last year).
Regarding a number of difficulties and obstacles, the SBV Deputy Governor shared that non-performing loans (NPLs) and potential bad debts tended to increase. The credit absorption capacity of businesses and people were low; many enterprises reduced or stopped production due to the shortages of orders, dissolution, closure, and declining financial capabilities. Moreover, the trend of tightening and restricting spending by the people had resulted in low credit demand.
In addition, the pressures on the banks’ credit continued to increase in the context that other capital mobilization channels of the economy faced many difficulties. The real estate market has not recovered and stabilized yet; the difficulties of the real estate market have also affected many satellite industries, as well as the consumers’ demand for housing. The world economy had experienced unprecedented developments; the interest rates had been kept at high levels, affecting the domestic interest rates and exchange rate. The SBV Deputy Governor also emphasized that natural disasters and flooding had caused a lot of losses and damage, affecting the lives, the production and business activities of customers, resulting in difficulties in the operations of several commercial banks.
Managing the monetary policy in a proactive, flexible, timely and effective manner
Regarding the tasks and solutions, the SBV Deputy Governor said that, in the coming time, the SBV would continue to focus on implementing multiple measures, including the following:
Continuing to manage the monetary policy in a proactive, flexible, timely and effective manner in coordination with the fiscal policy and other macroeconomic policies to contribute to promoting the economic growth, maintaining the macro-economic stability, and controlling the inflation.
Implementing the measures to manage the credit growth in a proactive and flexible manner in line with the macroeconomic developments and the inflation situation, creating favorable conditions for businesses and people to access the banks’ credit; continuing to allocate the credit limits to the credit institutions; studying the roadmap to gradually remove this measure according to the directions of the National Assembly and the Government.
Directing the credit institutions to regularly review all aspects of operations and the relevant legal regulations to improve the effectiveness and efficiency in their operational management, promptly identify any risks and violations, and deploying early warnings and preventive measures; enhancing the credit quality, continuing to maintain the stability of the mobilization interest rates, and making efforts to reduce the lending interest rates; removing any difficulties and promoting the credit in support of production and business activities, as well as for living needs and consumption.
Implementing strongly the credit programs for social housing, forestry and fisheries sectors; directing the credit institutions to strictly implement the credit programs as committed to the Prime Minister and the SBV.
Continuing with the debt payment restructuring and the maintenance of the debt groups; continuing to review and issue legal documents providing guidance for the 2024 Law on Credit Institutions, ensuring the consistency and unity in the implementation of the Law, and enable the access to bank loans.
According to Deputy Governor Pham Quang Dzung, in order to promote the recovery of the aggregate demand and increase the credit absorption capacity, apart from the solutions initiated by the banking sector, it is necessary to have comprehensive solutions implemented by other Ministries and agencies, as well as the local authorities, such as improving the investment and business environment; enhancing the traditional growth drivers; accelerating the capital disbursement for public investment operations; implementing policies on waiving and reducing taxes, fees for land use; resolving any difficulties for the stock, the corporate bond, and the real estate markets; maintaining the prices of commodities managed by the State; and improving the capital absorption capacity of businesses, etc.
Le Hang