The State Bank of Vietnam (SBV) stated that on June 10, 2019, total payment means increased by 5.17 percent compared to the end of 2018; the liquidity of the credit institution system was maintained and smooth. Credit outstanding for the economy rose by 5.75 percent compared to the end of 2018. Credit was directed at production, business and priority areas under the direction of the government while credit control for the field of potential risks was enhanced.
Nguyen Quoc Hung, director of Credit Department (SBV) said, credit for most priority areas increased significantly in the first five months of this year, such as credit for export sector grew by 13 percent; credit for high-tech application enterprises was up by 14.33 percent; credit for small and medium enterprises up by 5.04 percent; credit for agriculture and rural areas up by 5 percent; and credit for supporting industries up by 4.11 percent. Meanwhile, government-oriented credit programmes, such as loans to reduce losses in agriculture and to encourage clean agriculture, high-tech agriculture and social housing were also decisively developed.
In commercial banks, credit grew well in the first two quarters of this year.
Nghiem Xuan Thanh, Chair of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), said that the bank’s credit balance climbed by 6.2 percent compared to the beginning of 2019. The credit growth limit this year was allowed by SBV at 15 percent so that the bank would consider its target credit growth within the allowed limit.
For some other banks, credit also grew positively in the first months of 2019. At Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), in the first three months of 2019, consolidated bank credit increased by 6.8 percent, doubling the level of 3.1 percent of the previous year and three times higher than the industry average (2.28 percent). Asia Commercial Joint Stock Bank (ACB) also achieved the credit growth of three percent in the first quarter.
According to Nguyen Quoc Hung, the Draft replaces Circular 36/2014/ TT-NHNN which has amended a number of regulations relating to safety ratios of banks and foreign bank branches, in which it is expected to reduce the ratio of short-term capital sources for medium and long-term loans. Thus, this provision applies to loans invested in all sectors of the economy, not just for real estate.
But according to financial experts, with the three-stage roadmap to 2022, the maximum ratio of short-term funds used for medium and long-term loans decrease to 30 percent. Therefore, SBV can control liquidity risks to ensure the safety of the system against the changes in macroeconomic conditions, contributing to stabilising banking operations, supporting the promotion of sustainable economic development.
At the same time, the draft circular specifies the loan for buying real estate with a debt balance of over three billion dong, applying a risk factor of 150 percent; from 1.5 billion dong to three billion dong applying 100 percent; and under 1.5 billion dong, loans for buying social housing and houses under projects, applying a risk factor of 50 percent following the government’s support programme. It leads the real estate credit to real needs of people, promoting the development of low-cost commercial housing and social housingthe segment is lacking of supply.
In order to control credit in the set target and bad debt risks, SBV leaders said that in the last six months, it would continue to focus on implementing key credit management solutions to control credit scale consistent with the target, along with improving quality, expanding credit focusing on priority areas, production and business sectors, supporting economic growth according to the main objectives set out. Besides, SBV will strictly control credit in potential risk areas, synchronously deploy solutions to handle bad debts control and prevent newly arising bad debts.
In the last six months of the year, SBV has continued to promote the implementation of the restructuring of the credit institution system in association with bad debt handling by 2020, in which it focuses on effectively handling weak credit institutions.
