The State Bank of Vietnam will continue to have solutions to direct banks to reduce costs to reduce lending interest rates and cut unnecessary fees to support businesses and people.
As of the end of June, commercial banks have proactively adjusted and implemented preferential credit programs/packages to reduce lending interest rates by about 0.5% - 3.0%/year depending on the customer for new loans.
This was the content emphasized at the conference to review banking activities in the first 6 months of the year and deploy tasks for the last 6 months of 2023 organized by the State Bank on the morning of July 15, in Hanoi. Prime Minister Pham Minh Chinh attended and directed the conference.
Many solutions to overcome difficulties for businesses
Speaking at the opening of the Conference, Governor Nguyen Thi Hong said that after a year full of hardships, witnessing and coping with unprecedented events in history, the banking industry enters 2023 with many difficulties and challenges.
Specifically, the world and domestic economic situation continues to develop in a complicated and unpredictable manner, so the production and business activities of enterprises and people decline, bad debts increase while the requirement to implement solutions to remove difficulties for enterprises and people is still raised.
In that context, the banking industry is assigned tasks in the Resolution of the Government and the National Assembly on how to operate monetary policy to control inflation, macroeconomic stability, and monetary and foreign exchange market stability. At the same time, monetary policy management must ensure that interest rates can be reduced while exchange rates must be stabilized and solutions implemented to remove difficulties for the economy.
“In particular, implementing the Government's directives to balance growth and inflation, exchange rates and interest rates, monetary and fiscal policies, and internal and external situations is an extremely difficult requirement, especially when the monetary policy space is very limited, credit/GDP is at a warning level, and the monetary and foreign exchange markets are often affected by expectations,” the Governor emphasized.
However, according to the Governor, in addition to the achieved results, banking activities also face difficulties due to both subjective and objective reasons such as increasing bad debt and low credit growth.
Reporting more specifically on the results of monetary policy management in the first half of the year, Deputy Governor of the State Bank Dao Minh Tu said that the State Bank has continuously adjusted interest rates down 4 times with a reduction of 0.5% - 2.0% / year. By the end of June, the average deposit and lending interest rates of new transactions in VND of commercial banks decreased by about 1.0% / year compared to the end of 2022. Commercial banks have proactively adjusted and implemented preferential credit programs/packages to reduce lending interest rates with a reduction of about 0.5% - 3.0% / year depending on the customer for new loans.
According to Deputy Governor Dao Minh Tu, from the beginning of the year, the State Bank has allocated credit growth targets to credit institutions and directed credit institutions to direct credit to production and business sectors and priority sectors.
In order to provide more credit capital to promptly meet the needs of the economy, on July 10, the State Bank adjusted the credit growth target for 2023 for credit institutions to an increase of about 14% for the entire system. The adjustment of the target credit growth for credit institutions is implemented by the State Bank based on the credit institution's request, the operational situation, financial capacity, governance and ability to expand healthy credit of each credit institution, ensuring liquidity and operational safety of the credit institution system.
As of the end of June, over 18,800 customers had their debt repayment terms restructured and their debt groups kept the same; the total outstanding debt (principal and interest) restructured to keep the same group was nearly VND 62,500 billion.
Interest rates will continue to fall
According to Deputy Governor Dao Minh Tu, although interest rates have decreased, the demand and capital absorption capacity of the economy is still low when input costs are high, output markets and business orders are declining... leading to increased risk levels for customers. Loosening credit conditions can reduce credit quality, increase bad debts, and create consequences that threaten national financial security and the safety of the credit institution system in the future...
In addition, due to low growth of other capital sources such as stocks, bonds, and FDI, difficulties in the corporate bond and real estate markets have not been fundamentally resolved, causing capital sources for growth to focus on bank credit.
Regarding the real estate sector, the State Bank affirmed that in recent times, there have been many solutions to remove difficulties such as directing credit institutions to focus capital on projects that meet legal conditions, have the ability to consume products, have the ability to repay loans fully and on time, meet the real needs of the people, especially social housing projects, suitable for people's income and types of real estate serving the purposes of production, business, social security with high efficiency, have the ability to repay debts and develop.
The Deputy Governor added that in the spirit of sharing and accompanying people and businesses, the State Bank is currently urgently reviewing lending procedures and processes and fees and charges that credit institutions are applying to consider and direct credit institutions to cut unnecessary fees and charges.
Regarding the direction of monetary policy management and banking activities in the coming time, the Deputy Governor said that the State Bank will closely follow developments in the domestic and international macroeconomics, financial and monetary markets to continue to manage monetary policy and banking activities firmly, proactively, flexibly, promptly, effectively, and in harmonious, reasonable, and close coordination with fiscal policy and other macroeconomic policies.
In particular, interest rates must be managed in line with macro balance, inflation and monetary policy targets, and solutions must be continued to direct credit institutions to reduce costs to reduce lending interest rates, and unnecessary fees must be cut to support businesses and people in recovering and developing production and business.
In addition, continue to strictly control credit in areas with potential risks; create favorable conditions for businesses and people to access bank credit capital.
The Deputy Governor emphasized that the State Bank will continue to direct banks to deploy a credit package of VND120,000 billion from capital sources of commercial banks in accordance with the Government's direction. 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 Vietnam 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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