The economy is thirsty for capital but has difficulty absorbing it.
Reporting to the National Assembly Standing Committee on the socio-economic situation, the Government said that the groups of indicators on handling bad debt and ensuring capital safety at credit institutions are basically still under control.
According to statistics, by the end of June 2023, the bad debt ratio of the credit institution system was at 3.36% (1.69% at the end of 2020, 1.49% in 2021, 2022), the ratio of bad debt on the balance sheet, debt at the Asset Management Company (VAMC) not yet handled and potential debt becoming bad debt compared to total outstanding debt was at 5.1%.
However, the Government also stated that access to credit is still difficult, credit growth is low, bad debt tends to increase. The average registered capital of newly established enterprises tends to decrease.
Reviewing the report on the socio-economic situation, the Economic Committee proposed that the Government pay more attention and focus on assessing more closely the issue of the economy being thirsty for capital but having difficulty absorbing capital. Although the mobilization interest rate and lending interest rate have decreased, the outstanding credit balance as of September 21, 2023 only increased by 5.91% compared to the end of 2022.
“The operating interest rate has been adjusted down 4 times with a reduction of 0.5-2.0%/year, but the average deposit and lending interest rate of new transactions at the end of August 2023 only decreased by about 1.0% compared to the end of 2022,” said the Economic Committee.
Delegates attending the meeting.
Previously, Deputy Governor of the State Bank Pham Thanh Ha said that as of September 29, credit in the entire economy reached about VND12,749 trillion, up 6.92%.
According to the results of the Q4/2023 business trend survey with credit institutions just announced by the State Bank, outstanding credit of the banking system is expected to increase by 4.6% in Q4/2023 and increase by 12.3% in 2023, down 0.2 percentage points compared to the forecast of 12.5% in the previous survey.
Thus, if credit growth reaches 4.6% in the fourth quarter as expected, the total credit balance of the entire economy for the year will only reach 11.52%.
Deputy Governor Pham Thanh Ha had to admit that credit growth is still slower than last year, due to many reasons that need to be analyzed and evaluated specifically to find appropriate solutions.
According to economic experts, one of the reasons for low credit growth is the decrease in demand for investment, production, business, and consumption. Many businesses have difficulty maintaining and expanding their consumer markets, so they do not need to borrow capital.
Besides, there are still many businesses that are in dire need of capital, but do not meet the loan conditions, especially small and medium enterprises, real estate groups... this makes the credit flow from banks and businesses not meet each other.
Dealing with weak banks is extremely difficult.
In the audit report, the Economic Committee also stated that the implementation of the project to restructure the system of credit institutions associated with handling bad debts and the plan to handle weak credit institutions, projects and works with slow progress, ineffective investment, and prolonged losses is still very slow. Among them, there is the need to accurately assess and appraise the value of assets over many years.
The Economic Committee assessed that the slow handling of weak credit institutions also has a negative impact on the monetary market, affecting cost reduction and interest rate reduction of credit institutions.
In addition, the management capacity and efficiency of credit institutions are still limited; the situation of "cross-ownership", collateral assets are not properly valued, and lending to "internal" and "backyard" enterprises is still complicated.
The process of handling weak banks and restructuring "compulsory purchase" banks faces many difficulties in terms of legal framework and support mechanisms.
Governor of the State Bank Nguyen Thi Hong.
Speaking at the meeting, on the handling of weak banks, Governor of the State Bank of Vietnam Nguyen Thi Hong said that this is an extremely difficult issue that requires time. Right from the beginning of the term, the Government and the Prime Minister have given very strong directions. The State Bank and ministries and branches have also submitted and requested policies from competent authorities to actively handle the issue.
However, Governor of the State Bank of Vietnam Nguyen Thi Hong expressed that handling weak banks under normal conditions is difficult, and in the context of the middle of the term with the world and domestic economy being extremely difficult, it is even more difficult. Therefore, handling weak banks is still in the final stage .
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