Sharing at 2019 Vietnam Economic Conference on March 12, Pham Thanh Ha, director of Monetary Policy Department of the State Bank of Vietnam (SBV) said, in the first 2.5 months of 2019, increased positive credit growth was in line with SBV’s target, currently reaching over one percent. Specifically, credit increased strongly in January but started to slow down in February due to the Tet holiday. Ha also said that SBV was still buying a large amount of foreign currency even though the buying level was not as intense as last year. Interest rates were also in a stable trend; some banks, that increased deposit rates before the Tet, plan to reduce interest rates due to reduced liquidity pressure. SBV expects credit growth in 2019 to be similar to 2018 at 14 percent. Foreign currency credit will continue to be cut in 2019, which has also been the direction of SBV for many years.
Explaining the low growth orientation, SBV leaders said that if we allowed strong growth, the pressure of capital mobilisation would be very high, causing interest rates to be affected, thereby putting pressure on inflation. The general goal of the government was to stabilise macro economy, curb inflation. Accordingly, the policies to regulate exchange rates, interest rates, credit growth must coordinate smoothly to serve this goal. SBV could not do this alone but must cooperate with other agencies such as the Ministry of Finance, the Ministry of Industry and Trade.
Referring to the impact of credit, Nguyen Dinh Tung, general director of Orient Joint Stock Commercial Bank (OCB) shared, credit was still the main business product of banks, bringing the main profit. However, the bank’s development cannot be as desired as many other types of businesses because there are many characteristics. Tung affirmed that when SBV had a policy to reduce credit growth, commercial banks must find ways to turn around to ensure business activities. In fact, this was the story that banks had taken into consideration from five to six years ago before SBV imposed a credit growth ceiling for the system and each bank. “We also understand that this is a necessary measure to stabilise the macro economy and also create conditions for banks to develop sustainably. Since then, we also have to take into account the appropriate strategy when stopping credit growth, for example, to shift to other products”, OCB leader shared.
Experts said that the currency market this year was likely to remain stable, based on positive developments in the country in recent months and prospects for an international picture would have a more stable year.
Ha Huy Tuan, vice Chair of the National Committee said that the interest rate level depended on the domestic environment. The international context was expected to not have much “shock”, for example, the trade war had somewhat softened, the Federal Reserve (FED) would only increase interest rates by one to two times as planned while the Chinese market would send a cautious message with exchange and interest rates.
OCB’s general director forecasted that this year’s interest rate level would remain as in 2018, not much fluctuation. However, the interest rate for each object and loan purpose would be increasingly different. Based on the risk level of each customer and each loan, there were businesses that could only borrow at the interest rate of six percent but some had to borrow at an interest rate of 11 percent.
