|SBV Deputy Governor Dao Minh Tu chaired the meeting.|
Low credit growth
Information at the industry-wide online conference on credit work and the implementation of Circular 02/2023/TT-NHNN held by the State Bank on April 25, credit growth until April 20 reached over 12.23 million billion VND, up 2.57% compared to the end of 2022, up 10% over the same period in 2022.
Recently, the State Bank of Vietnam issued Circular No. 02/2023/TT-NHNN stipulating that credit institutions and foreign bank branches restructure the repayment term and keep the debt group unchanged to support customers in difficult situations.
Ha Thu Giang, Director of the Credit Department for Economic Sectors (SBV), said that the Circular was issued to facilitate extending the loan period and repaying bank loans, reducing the pressure of debt repayment for customers, creating favourable conditions for customers to access capital sources to serve production, business and consumption, thereby promoting economic growth.
Moreover, to ensure capital adequacy, the Circular requires credit institutions to still assess, classify and make provisions according to the actual debt group of customers, strengthening the inspection and supervision in the implementation process.
In addition, according to Pham Chi Quang, Director of the Monetary Policy Department (SBV), the Government and the State Bank of Vietnam have continuously issued policies to support businesses and people, such as increasing the money supply, reducing interest rates, and increasing foreign exchange reserves. As a result, the State Bank has reduced the operating interest rate twice, so up to now, the new lending interest rate has decreased by 0.6% compared to the end of 2022.
On the same day, Prime Minister Pham Minh Chinh chaired a meeting with ministries and sectors to discuss solutions to reduce lending interest rates and the operation of the corporate bond market. A representative of the Monetary Policy Department said that four state-owned commercial banks strongly agreed with the Government’s policy to reduce lending interest rates in the coming time.
“Taking attendance” of a series of banks with high-interest rates
At the conference, representatives of commercial banks said that the reason for the low credit growth was not due to policy mechanisms. However, because the economy’s capital absorption decreased when export orders decreased, demand there was no consumption making production and business activities less satisfactory. Therefore, banks all highly appreciate the effectiveness of Circular 02, helping businesses not be transferred to bad debt groups and continue to receive capital from banks.
According to SBV Deputy Governor Dao Minh Tu, in general, the credit growth of banks is low, caused by the difficulties of the economy and the real estate market, but there is also part of the reason from the banks. For example, issues related to cross-selling of insurance through banks were recently tightened, affecting fee income, so banks had to push lending rates higher to compensate.
Therefore, one issue highlighted by SBV Deputy Governor Dao Minh Tu at the conference was that credit growth was low, but lending interest rates were still high, up to 12-15%/year. Looking at several banks offering interest-rate loans, the Deputy Governor of the State Bank of Vietnam requested the banks to report and, at the same time, asked the banking inspection and supervision agency to “keep an eye on” and warn the banks. Because in the past, businesses have “cold” a lot about the situation of high-interest rates, unable to stand.
Facing the above situation, the Deputy Governor of the State Bank of Vietnam asked banks in the coming time to focus on promoting credit in the spirit of sharing difficulties with businesses. Furthermore, the whole banking industry needs to effectively implement the policy of restructuring debt repayment terms and keeping the debt group intact following the Government’s direction.
“Banks need to rethink credit activities as not only a profitable channel for banks, but also a political task entrusted by the Party, State, National Assembly, and Government to realize the objective of the banking system.” The goal is to accompany and support people and businesses to overcome difficulties, recover and develop the economy sustainably,” the Deputy Governor stated.