Prime minister Nguyen Xuan Phuc told a conference on the banking sector’s plans for 2019, held by State Bank of Vietnam on January 9, that the sector should not be inattentive despite the strong performance of bad debt settlement last year. Multiple bottlenecks faced by banks need to be lifted, the government leader was cited by Thanh Nien newspaper as saying.
Speaking at the conference, the prime minister underscored some targets the sector had successfully achieved in 2018, with the first being the forex purchase of $10 billion, which raised the country’s foreign reserves to a record high of $60 billion.
The second highlight of the banking sector in 2018 was its credit growth being harnessed at some 14 percent over the previous year, the lowest since 2014. Further, the country’s gross domestic product rose by 7.08 percent, and Vietnam enjoyed a trade surplus of $7 billion last year.
The prime minister noted that bad debts had dropped to 1.89 percent from 2.46 percent of the total. The entire banking system settled some VND900 trillion in bad debt, which contributed to the development of the sector.
In addition, Phuc praised the efforts of bank officials in terms of bad debt settlement and pursuit of macroeconomic development.
The prime minister, however, noted that although banks had shown a strong performance in 2018, efficiency remained limited and products and services were yet to be diversified.
The management of the banking sector was still restricted and technologies applied to banking in Vietnam are not as modern as those in the global market, Phuc said.
Besides this, the prime minister stated that the rampant spread of activities of loan sharks had provoked concerns among residents and destabilised social security over the past few years.
Large numbers of residents have yet to access bank loans, proving that banks have failed to popularise their products and services among customers in hinterland areas, the prime minister remarked, adding that it is necessary to promptly create favourable conditions for residents to access bank loans to curtail the activities of loan sharks.
Further, restructuring of some credit institutions was executed slowly, falling short of requirements, he noted. As such, the prime minister proposed controllers and inspectors of banking agencies speed up their actions and impose strict penalties on violators.
At the conference organised in Hanoi City, the State Bank of Vietnam proposed a capital spike for State-owned commercial banks.
Speaking at the conference, Trinh Ngoc Khanh, board chair of the Vietnam Bank for Agriculture and Rural Development (Agribank), presented the bank’s 2018 performance. Although Agribank increased its assets by up to VND1,200 trillion last year, the bank was still dogged by rumours of an impending bankruptcy, causing customers to withdraw their cash en masse. As a result, Agribank recently set aside over VND20 trillion in reserve funding.
Khanh said that the bank was competing with the activities of loan sharks and was in the process of boosting lending and considering expanding the overdrawing cap.
In addition, VietnamPlus cited Vietcombank Chair Nghiem Xuan Thanh as saying that the bank had earned a record VND18 trillion in profits in 2018, soaring by 63 percent against the results seen in 2017. Thanh attributed the high profits to tight control over bad debts.
The chair of Vietcombank also proposed the government allow State-run commercial banks to raise their charter capital.
Sharing his opinion, Chair of VietinBank Le Duc Tho stated that capital demand will surge in the coming days, so this should be considered an urgent need.
https://english.thesaigontimes.vn/65456/obstacles-in-banking-sector-need-to-be-removed-pm.html
