Over the course of many years, the Danang banking system has played a positive role the socio-economic development of the city, evident in its effort to attract capital for investment and development and improve the service quality in order to better meet customer demand. Bank credit is satisfying demand for capital in a timely manner, providing a strong support base for the socioeconomic development of the city.
According to Mr Vo Minh, Director of the Danang Branch of the State Bank of Vietnam (SBV), for the last 15 years, together with the development of the city, the banking industry has seen notable transformation in both quantity and quality. Banks continue to upgrade and modernise their facilities and operational models, as well as expand their network. Banks not only build on the reputation of their traditional services, but also implement new high-tech services such as multifunctional cards, electronic banking and automated transaction systems.
Bank credit has helped maintain a high rate of economic development over the years. As of June 30, 2012, the total outstanding debt of credit agencies based in Danang was VND48,000 billion, contributing to the 23.45 percent per year average growth rate in the 1997-June 2012 period. The short-term outstanding debt was VND26,360 billion, while the middle and long term ones were VND21,771 billion in total.
At the same time, bank credit has also contributed to a shift in the mechanism and development of core economic sectors. Accordingly, the loan for the industry, commerce and service and construction sectors always represents a large portion of the total outstanding debt. As of June 30, 2012, the amount of outstanding debt of industry sectors represented 21.37 percent, commerce 19.35 percent, construction 12.8 percent of the total outstanding debt. During the last few years, when the SBV implemented measures to curb inflation, reduce consumption and tighten credits, transferring credits to prioritised industries and sectors is on top of the agenda. As of late 2011, outstanding credit ratio for production and commerce industries increased from 73 percent (late 2010) to 78 percent of total outstanding debt
In addition, banks are shifting their investment to the private sectors, in line with the industry’s general orientation. Credit loan ratio for the private sectors is taking a larger portion of the total outstanding debt. As of late June 2012, outstanding debt for this sector represented 87 percent of total outstanding debt.
Also according to Mr Minh, the local banking system has adhered to the credit policies set forth by the Government and lent a helping hand to build homes for low-income people, create more jobs, reduce poverty and maintain social security through funds set aside for projects to support production and commerce. As of late June 2012, outstanding debt for the agricultural sector in rural areas was VND439 billion, while that for individuals under the social policy program at the Vietnam Bank for Social Policies was VND807 billion.
Besides these abovementioned achievements, credit lending activities in the city still have their setbacks. The credit growth rate for several years was too high; credit lending mechanism does not really match the funding structure; bank and real estate credits have a close correlation since the majority of mortgaged assets are real estate; and credit quality is not up to standard, which negatively impacted the banks’ operation.
Mr Minh also believes that in the current economic condition of Vietnam, Danang in particular, while other capital attracting channels are still in its infancy, banks continue to play a major role in supplying capital for different economic sectors in the city. This task has been well-accomplished by the Danang banking industry in the last 15 years, and will continue to be so in the future.
Thai Ha
Vietnamese
