Interest rates will continue to fall.

At the conference to review banking activities in the first 6 months of the year and deploy tasks for the last 6 months of the year held on the morning of July 15, Deputy Governor of the State Bank of Vietnam Dao Minh Tu informed that by the end of June 2023, the average deposit and lending interest rates of new transactions in VND of commercial banks (CBs) will decrease by about 1.0%/year compared to the end of 2022.

With the impact of policy lag, it is expected that lending interest rates for the economy will continue to decrease in the coming time.

Regarding credit management, on July 10, the State Bank of Vietnam adjusted the credit growth target for 2023 for credit institutions to an increase of about 14% for the entire system. This is an effort by the State Bank of Vietnam to remove difficulties for production and business under the direction of the Government and the Prime Minister in the context of economic growth in the first 6 months of the year being lower than the proposed scenario and capital sources in the economy being difficult.

As of June 30, economic credit reached over VND 12.49 million billion, up 4.73% compared to the end of 2022. In particular, the credit structure continues to focus capital on production and business sectors, priority sectors according to the Government's policy, contributing positively to the country's GDP growth.

Recently, the State Bank has directed credit institutions to seriously and urgently implement the policy of supporting interest rates from the state budget for loans of enterprises, cooperatives, and business households according to Decree 31/2022/ND-CP.

By the end of May 2023, interest support sales reached more than 123,000 billion VND, outstanding interest support loans reached more than 54,000 billion VND for 2,000 customers, the amount of money supported for customers accumulated since the beginning of the program reached about 500 billion VND.

*Deputy Governor Dao Minh Tu reports to the Prime Minister and delegates attending the 6-month review conference of the banking sector. (Photo: SBV).*

Up to now, the results of interest rate support have not met expectations due to many reasons. The State Bank has promptly synthesized, evaluated and proposed recommendations to the Government and the Prime Minister.

Besides commercial credit, the Bank for Social Policies promotes the implementation of preferential credit programs for the poor, other policy subjects and 03 National Target Programs.

As a result, by June 30, 2023, the total outstanding policy credit balance reached VND 304,431 billion, an increase of 7.4% compared to 2022. Of which, lending policies under the Socio-Economic Recovery and Development Program reached over VND 19 trillion. Lending to the National Target Program for Socio-Economic Development in Ethnic Minority and Mountainous Areas according to Decree 28/2022/ND-CP reached over VND 1,500 billion. The National Target Program for New Rural Development with outstanding loans in communes reached over VND 1.7 million billion.

What message for the last 6 months of the year?

Regarding the banking sector's operational orientation for the last 6 months of the year, Deputy Governor Dao Minh Tu said that the State Bank will manage interest rates in line with macro balance, inflation and monetary policy targets; continue to have solutions to direct credit institutions to reduce costs to reduce lending interest rates, cut unnecessary fees to support businesses and people to recover and develop production and business.

Manage credit growth volume and structure reasonably, meet credit capital needs for the economy to contribute to controlling inflation and supporting economic growth.

Continue to direct credit institutions to increase credit growth rapidly, along with credit quality and loan safety; direct credit capital to production and business sectors, priority sectors and growth drivers of the economy according to the Government's policy; ensure safe and effective credit activities; continue to strictly control credit in potentially risky sectors; create favorable conditions for businesses and people to access bank credit capital.

The State Bank will also continue to direct commercial banks to deploy a credit package of VND 120,000 billion from capital sources of commercial banks in accordance with the Government's direction. Accelerate the implementation of the tasks of the banking sector in the Socio-Economic Recovery and Development Program and National Target Programs. In particular, focus on implementing the 2% interest rate support program according to Decree 31/2022/ND-CP of the Government, and policy credit programs through the Bank for Social Policies.

Closely monitor and supervise the implementation of the policy of restructuring debt repayment terms and maintaining debt groups to support customers facing difficulties according to Circular 02/2023/TT-NHNN; promptly guide and remove arising problems (if any)...

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