The capital of banks in Ha Tinh is currently quite abundant, but developing outstanding loans is a "difficult problem" due to the impact of the economic recession. By the end of October, outstanding loans in the whole area were estimated at VND91,900 billion, up only 5.4% compared to the end of 2022.
To increase capital inflows into the economy, since the beginning of the year, the State Bank of Vietnam (SBV) has lowered its operating interest rates four times, resulting in a sharp decrease in lending rates of 2-3% compared to the beginning of the year. However, the economy’s ability to absorb capital remains modest.
MTV Garment Export Joint Stock Company's export orders have decreased by 50%, so the need for loans has decreased sharply.
MTV Garment Export Joint Stock Company (Bac Cam Xuyen Industrial Park) specializes in sewing protective clothing for export to Japan and fashion items for export to the US and some European countries. From October 2023, the company's production and business activities began to face "turbulence". Orders for protective clothing exported to Japan decreased by 50% compared to before.
According to Ms. Luong Thi Tuyet - General Accountant of MTV Garment Export Joint Stock Company, the market is likely to show no positive signs in the last months of the year and early next year. Orders have decreased sharply, so the demand for investment loans of businesses has also decreased.
Similarly, cooperatives in the area are also “afraid” to access bank capital when their operations have not shown positive trends. Thang Loi Cooperative (Xuan Thanh Commune, Nghi Xuan) specializes in raising large-scale sows, supplying pork and breeding pigs to the market. However, for nearly 2 years now, the disease in livestock has been complicated, the price of animal feed has increased by more than 30%, while the price of live pigs has decreased sharply, the cooperative has only broken even, and at times suffered losses, so it has proactively reduced its herd.
Ms. Nguyen Thi Nghia - Director of Thang Loi Cooperative said: "We are currently raising only 200 sows, exporting 200 pigs for meat and 300 breeding pigs each month (a 30% decrease compared to the previous period). Currently, the market is unstable, so the cooperative has not considered increasing the herd, which means there is no need to borrow capital for investment."
Vietcombank Ha Tinh's capital is currently abundant.
Ms. Nguyen Thi Hanh - Head of Retail Customer Department, Vietcombank Ha Tinh informed: "The unit's capital is currently abundant. To increase outstanding loans, Vietcombank has repeatedly announced a reduction in lending interest rates, currently the lending interest rate is only 5.5%/year, however, "pushing" capital to production and business households is still difficult. The main reason is due to "escalating" production costs, reduced demand for product consumption, narrowing market... so customers' demand for investment loans is limited. In addition, people's demand for consumer loans and shopping loans has also decreased sharply compared to before. Not to mention customers who need to borrow capital for production and business investment but are not eligible for disbursement due to unsecured assets, unable to prove their source of income or unable to determine the purpose of the loan..."
At Vietnam Maritime Commercial Joint Stock Bank (MSB) Ha Tinh, recently, the development of outstanding loans has also faced many challenges and the branch is in a state of "excess money".
Mr. Le Hong Phong - Director of MSB Ha Tinh said: “80% of the branch's customers are individuals. Current interest rates are no longer a concern because they have decreased significantly compared to the beginning of the year (decreased by about 3%/year). However, the difficult problem is that the production and business situation is difficult in all industries, so people have no intention of investing or only invest sparingly. Up to this point, the branch has only completed about 90% of the assigned credit plan, a significant decrease compared to the same period in 2022".
Customers come to transact at SMB Ha Tinh.
Analyzing the reasons for slow credit growth, a representative of ACB Ha Tinh said that due to the economic recession, businesses and people have limited investment, customers mainly transfer outstanding loans from one bank to another, and new loans are not significant. The target from now until the end of the year that ACB Ha Tinh has set is to increase outstanding loans by 200 billion VND, but in the current context, achieving this is quite difficult.
In recent times, the State Bank of Vietnam (SBV) has regularly directed credit institutions (CIs) to direct credit to production and business sectors and priority sectors. In general, banks have created favorable conditions for customers to access credit capital, simplified lending procedures, and publicly and transparently listed loan procedures and processes. In addition, a series of preferential loan policies have been issued such as: 2% interest rate support policy according to Decree No. 31/2022 of the Government, 50% interest rate support policy according to Resolution No. 51/2021 of the People's Council of Ha Tinh province, Circular No. 02/2023 of the State Bank of Vietnam on debt repayment period structure and maintaining debt groups for customers facing difficulties, VND 120,000 billion credit package for social housing loans, VND 15,000 billion credit package for forestry and fishery sectors..., but customers' access to capital is not as expected.
As of October 31, 2023, outstanding loans of credit institutions in the area are estimated at VND 91,900 billion, an increase of about 4% over the same period and an increase of about 5.4% compared to the end of 2022. Compared to the set target of credit growth in 2023 of 14% compared to the end of 2022, this figure is still very modest.
Departments, branches, localities... need to have practical solutions to "resolve difficulties", creating conditions for businesses and people to promote production and business.
In general, the economy's weak capital absorption capacity comes from the difficult market context due to the impact of post-COVID-19 and economic recession. When the economy is in difficulty, the market shrinks, the consumption of goods decreases, businesses and people do not expand production but only maintain moderate activities. Therefore, even if the interest rate level drops sharply, credit is unlikely to increase dramatically and many banks are in a state of "excess money".
Currently, the issue that people and businesses are concerned about is not interest rates, but most of them do not dare to borrow capital for investment because they have not seen positive signs from the market. Therefore, efforts from the "bank" alone are not enough, but need the drastic participation of departments, branches, localities and the Ha Tinh Business Association with practical solutions to "resolve difficulties", creating conditions for the business community and people to promote production and business, especially the issue of trade promotion and product consumption in the "final sprint" of the year.
Thu Phuong
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