Local Economy

Last updated: Wednesday, May 15, 2019


HCM City Banks Record Positive Growth

Posted: Monday, June 11, 2018

The banking sector of Ho Chi Minh City managed to obtain stable and effective business performance in the city in 2017, said Mr To Duy Lam, Director of the State Bank of Vietnam - Ho Chi Minh City Branch (SBV Ho Chi Minh City). Impressive results of fundraising, credit, bad debt settlement and credit institution restructuring showed the success of the banking industry of Ho Chi Minh City particularly and of Vietnam generally. Bich Thuy - Anh Dao report.

Could you please tell us about the outstanding performances of the banking industry in 2017 and in early 2018?
In 2017, the most remarkable and important result was the stable and optimistic growth of local monetary market and banking operations. Except for weak credit institutions which are under restructuring, most other credit institutions grew well and made a profit. This result was very important in the context of numerous hardships facing the banking system. This will be the foundation for local credit institutions to grow and develop in the future and play an important role in implementing macroeconomic measures such as market stabilisation, growth acceleration and major credit policies of the Government and the city as well as good solutions for business development support.

More importantly, the results achieved in 2017 created a premise for the development of the banking industry of Ho Chi Minh City in 2018 and beyond. In fact, operating results of the banking sector in the first three months of 2018 picked up, driven by continued growth of deposit mobilisation, credit and services, with outstanding loans rising 4.2 per cent compared to the end of 2017. This is the highest-ever first quarter growth in any year to date.

How have you strived to facilitate local credit institutions to develop healthily and effectively to best serve local socio-economic development?
From the perspective of a regulator, our most effective solution and the biggest effort are implementing monetary, credit and banking policies and mechanisms well in the city. Major contents include directing the enforcement of those policies and mechanisms; monitoring and understanding the implementation process, outcomes and difficulties arising from the process of implementation to apply prompt solutions or propose proposals; and make assessment reports. This process is closely linked to administrative reform and legal compliance in order to ensure effective policy enforcement.

This is an effective approach because the performance of policies and mechanisms is very high. The stage of implementation decides the performance of policies and mechanisms. This is a great lesson and success of administration by the SBV Ho Chi Minh City in a vast area where enforcement, assessment and lesson learning are quite creative and flexible and where there are initiatives and models originated from the development of credit institutions to diversification of products, services, credit programmes and business support programmes like bank - business connection programme, market stabilisation funding programme, credit stimulation programme for industrial parks and export processing zones. These programmes have been effectively carried out in the past years, directly supported business development and contributed to local economic growth.

What solutions and action plans has the banking sector taken to support and facilitate local enterprises in boosting their production and business?
It is easy to see that monetary, credit and banking policies and mechanisms in recent years are very accommodating to business operations local enterprises, business households and individuals. On the macro level, in addition to contributing to building and creating a favourable business environment, policies and mechanisms adopted by the State Bank of Vietnam, particularly exchange rate and interest rate, have contributed significantly to supporting and facilitating business growth and development for local entities. In this process, the banking sector in Ho Chi Minh City has played a central role and most importantly brought those policies and mechanisms into real life. It has facilitated local enterprises to access policies and programmes of the Government, the State Bank of Vietnam (SBV) and the Ho Chi Minh City People’s Committee for their business expansions through the two following main solutions:
Firstly, carrying out business support programmes and activities: Business dialogues designed to disseminate information on monetary, credit and interest rate policies and solutions to removing difficulties facing enterprises; connecting banks and enterprises to promote credit, interest rate and service support; and organising preferential credit programmes for enterprises and for disadvantage areas to boost economic growth and development, especially for small and medium-sized enterprises (SMEs).

Secondly, carrying out solutions to reforming administrative procedures in the banking sector in the spirit of Resolution 35 of the Government, Action Plan 1355 of the State Bank of Vietnam, and the Action Plan 3907 of the Ho Chi Minh City People’s Committee with the following main activities: changing transaction models and making transaction procedures, interest rates, exchange rates and fees public and transparent and consulting customers to ensure convenience and utility for businesses when dealing with banks and accessing bank loans. At the same time, the sector has constantly applied new modern banking technologies not only to product development, but also to the operation and administration of local banks. Thus, the sector has managed to improve operating performance, reduce input and output costs, as well as reduce lending interest rates to support business development.

Do you think interest rates are now reasonable? Will enterprises be able to access lower rates in 2018?
In the last three years, market signals such as capital demand and supply, interest rates and exchange rates are stable and god for enterprises. We have not received any complaint about unreasonable interest rates from local enterprises as in 2011-2014. And, according to the overall guidance of the Government and in the spirit of business support in 2018 - the year of reducing business costs for enterprises”, the State Bank of Vietnam will seek to stabilise and lower interest rates toward ensuring economic stability and fostering economic growth. Accordingly, in the spirit of Directive 01 of the State Bank of Vietnam, the Ho Chi Minh City Branch will focus on reducing administrative costs and enhance operating performance to cut down input costs so as to lower output costs and lending interest rates in addition to carrying out effective monetary, credit and banking policies. This is considered an underlying and sustainable solution that requires the entire banking sector to implement regularly and creatively.

What are growth targets of the Ho Chi Minh City banking sector in 2018 and how can they be achieved?
This year, we are closely following the direction of the State Bank of Vietnam as guided in the Directive 01 of the Governor on monetary, credit and banking solutions in 2018. It can be seen that the growth of the banking sector is closely linked to important macroeconomic tasks: macroeconomic stability and economic growth support. Therefore, achieving general inflation and economic growth objectives and tasks is important and decisive to delivering on other related objectives. Particularly, solutions to stabilising monetary market, restructuring the banking system, dealing with bad debts, improving operational efficiency and bettering business support through the implementation of Action Plan 1355 are basic solutions and tasks of the banking sector in 2018.

Thank you very much!

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