On January 2, 2020 at its headquarters, the State Bank of Vietnam (SBV) organized a video-conference to disseminate the tasks of the banking sector in 2020.
SBV Governor Le Minh Hung delivers his opening speech at the conference
The conference was attended by H.E. Prime Minister Nguyen Xuan Phuc; Governor Le Minh Hung, Deputy Governor Dao Minh Tu, Deputy Governor Nguyen Kim Anh and Deputy Governor Nguyen Thi Hong.
From the ministries and Government agencies, there were Mr.Nguyen Chi Dzung, Minister of Planning and Investment; Mr. Nguyen Xuan Cuong, Minister of Agriculture and Rural Development; Mr. Tran Tuan Anh, Minister of Industry and Trade; Mr. Le Thanh Long, Minister of Justice; Mr. Tran Hong Ha, Minister of Natural Resources and Environment; Mr. Chu Ngoc Anh, Minister of Science and Technology; Mr. Nguyen Manh Hung, Minister of Information and Communications; Mr. Vo Van Dzung, First Deputy Head of the Central Committee of Internal Affairs; Mr. Son Minh Thang, Secretary of the Party Committee of the central agencies; Mr. Y Thanh Hà Niê Kđăm, Secretary of the Party Committee of the Central Business Block; and representatives from other ministries and agencies.
Also attending the conference were leaders of the SBV entities and Chairpersons of the Boards of Directors/Boards of Management and CEOs of the credit institutions.
Prime Minister Nguyen Xuan Phuc speaks at the conference
In his opening speech, Governor Le Minh Hung briefed the conference on the remarkable achievements of the banking sector in 2019. After that, Deputy Governor Dao Minh Tu reported on the results of the banking operations in 2019 and the orientations for 2020.
Prime Minister Nguyen Xuan Phuc takes a photo with the SBV Management Board and leaders of the ministries and agencies
Accordingly, implementing the Government’s directions in Resolution No. 01/NQ-CP, the SBV issued Directive No. 01/CT-NHNN dated January 8, 2019 providing comprehensive instructions for the banking operations. Following closely the macro-economic developments in 2019, the SBV managed the monetary policy in an active, flexible and prudent manner in close coordination with the fiscal policy and other macroeconomic policies to control the inflation at the set level, stabilizing the macro-economy, supporting the economic growth at a reasonable level, and ensuring a prudent system of credit institutions.
In 2019, the SBV implemented the monetary policy instruments in a synchronous and flexible manner in order to stabilize the money and forex markets, contributing to controlling the average core inflation at 2.01%. By the end of 2019, the total liquidity increased by about 13% in comparison with that of 2018; the liquidity of the whole banking sector was ensured, meeting the demand for payment of the economy.
About the management of the interest rates, the SBV followed closely the Government’s directions and the market developments to conduct measures of facilitating enterprises and individuals to get access to bank loans for production and business. On September 16, 2019, the SBV reduced the key interest rates by 0.25% p.a; on November 19, 2019, the maximum mobilizing interest rates were lowered by 0.2-0.5% p.a for below 6- month terms, while the maximum lending interest rate declined by 0.5% p.a for the priority fields; the interest rates in the OMOs decreased by 0.75% p.a.
The exchange rates were stable and the liquidity was abundant; the legitimate demands for foreign currencies were met fully and promptly. In 2019, the SBV bought a large amount of foreign currencies to supplement the state foreign exchange reserves.
Deputy Governor Dao Minh Tu presents a report at the conference
About credit management, credit continued to be controlled strictly, focusing on production, contributing to renovating the growth models, meeting the legitimate capital demands, limiting “black” credit. Credit in foreign currencies continued to be controlled in line with the roadmap to restrict the dollarization; credit for potentially risky fields was controlled at a reasonable level.
In addition, the SBV also paid much attention to the administrative procedure reform. In 2019, the SBV achieved the first rank out of the central Government ministries and agencies in the Public Administration Reform (PAR) Index for four consecutive years.
With the drastic implementation of these measures, in 2019 the banking sector could basically meet promptly the capital demand for production and business. By the end of 2019, credit increased by over 13.7% as compared to the end of 2018. The credit structure continued to have positive adjustments, focusing on production, business and the priority areas. By December 31, 2019, it was estimated that credit for agriculture and rural areas increased by about 11% in comparison with the end of 2018, accounting for about 25% of the total loan outstandings; credit for small and medium enterprises increased by about 16%, credit for high-tech enterprises rose by about 15%. According to the WB’s Report on Doing Business 2020 announced on October 24, 2019, Vietnam's Access to Credit index ranked 29 over 190 countries and territories, and the second highest in ASEAN.
The restructuring of credit institutions also continued to be strengthened. The prudence and safety of the banking system was ensured. The solutions to address NPL were conducted consistently and comprehensively in association with other measures of controlling and preventing newly-arising bad debts, thereby contributing to improving the credit quality and reducing the NPL ratio of the system of credit institutions.
An overview of the conference
With the SBV’s drastic instructions and the efforts of credit institution system, by December 2019, it was estimated that the NPL ratio of the whole credit institution system was 1.89% (within the set-out target of below 2%). From 2012 to the end of December 2019, the whole credit institution system resolved VND 1,064 trillion of bad debts. Accumulated from August 15, 2017 to the end of December 2019, it was estimated that the whole credit institution system resolved VND 305.7 trillion of bad debts as determined in line with Resolution 42 (excluding the use of risk provisions and debts sold to VAMC through the issuance of special bonds). On average, from August 15, 2017 to December 2019, the whole banking system resolved about VND 10.5 trillion per month, VND 4.9 trillion higher than the average NPL resolved between 2012 and 2017, before the effective date of Resolution 42.
Concerning the legal basis in the field of payment, the SBV followed closely the actual situations, proactively and promptly coordinated with the relevant ministries and agencies to survey and propose to the Government to formulate a new Decree on cashless payments; submitted and implemented a Regulatory Sandbox for Fintech; Reported on the pilot mechanism of P2P Lending in Vietnam, etc. At the same time, the SBV also instructed the credit institutions to continue to invest in and develop the payment infrastructure, apply the innovations of I.R 4.0, etc. In the payment field, all new and available technologies in the world have been applied in Vietnam (ATM, POS, Internet Banking, Mobile Banking, QR Code, Tokenization,...). By the end of October 2019, there were over 78 payment service providers implementing payment services via the Internet and 47 providers conducting payment services via mobile phones. In the first 10 months of 2019, the number and value of financial transactions via the Internet increased by over 67% and over 36% respectively; the number and value of financial transactions via mobile phones rose by 186% and 221% respectively as compared to the same period of 2018. Payments via QR code also gained good growth.
Deputy Governor Nguyen Kim Anh speaks at the conference
The communication work about non-cash payments also received special attention from the SBV and was conducted effectively. Over the past time, the SBV has proactively developed the content and formulated several financial education programs, such as "Smart Money", "Smart-kids”, “Wise Money”,... thereby improving the knowledge and reducing the risks for customers when accessing financial products and services, contributing to improving the accessibility to financial products and services, promoting non-cash payments.
Some photos at the conference:
Le Hang