As of June 10, Vietnam’s credit growth expanded 5.75% against the end of 2018, lower than the rate of 6.16% recorded at the same period last year, according to the State Bank of Vietnam (SBV).
SBV's Deputy Governor Nguyen Thi Hong at the meeting. Source: SBV.
The growth rate was less than half of the 14% target set for 2019, informed Pham Thanh Ha, head of the SBV’s Monetary Policy Department, at the bank's semi-annual press meeting on June 13.
The credit structure has been shifted towards manufacturing, especially in priority fields as per the government’s instruction, while loans are tightened to sectors posing high potential risks, Ha said.
Meanwhile, the exchange rate policy has been managed in a flexible manner, and the SBV has taken advantage of favorable market conditions to buy in a large amount of foreign currency for the country’s foreign exchange reserves, Ha continued.
Amid rising rates in global markets, interest rates in Vietnam remain stable, ranging from 6 – 9% per annum for short-term lending and 9 – 11% for mid- and long-term loans, Ha informed.
Do Trong Du, deputy chief inspector of the Banking Supervision Agency, said the introduction of the National Assembly's Resolution No.42, which came into effect in August 2017 providing special pilot dealing with bad debts at credit institution, has been pivotal in restricting the bad debt ratio at low level and increase the quality of credit.
Du said from the period of 2012 to the end of March 2019, credit institutions handled VND907.33 trillion (US$38.89 billion) in bad debts, including VND163.14 trillion (US$7 billion) of toxic debts in 2018.
Currently, the bad debt ratio as reported by banks stood at 2.02% as of the end of March, Du said.
Pham Tien Dung, head of the SBV’s Payment System Department, said following the government’s initiative in promoting non-cash payment, the SBV has been putting in places measures to encourage the use of this payment method.
According to Dung, total number of transactions through the inter-bank e-payment system in the first five months of 2019 reached over 64 million with total value of over VND35,700 trillion (US$1,530 trillion), up 23% in quantity and 17.3% in value year-on-year, respectively.
The combined transaction value through internet banking and mobile payment was estimated at nearly VND4,581 trillion (US$197.15 billion) and VND924 trillion (US$39.6 billion), up 13.5% and 232.3% year-on-year, respectively.