The banking sector reported bringing credit growth to 8.54 per cent by the end of July. However, their bad debts kept by VAMC were still high because they could not be sold.
At a recent press conference on banking performances in the first seven months of 2016 in Hanoi, Mr Nguyen Duc Long, Deputy Director of the Monetary Policy Department under the State Bank of Vietnam (SBV), said, the SBV took consistent, flexible monetary policy instruments to regulate rational money supply to stabilise interest rates and to reduce lending rates, support exchange rate stabilisation and government bond issuance and increase foreign-exchange reserves while still ensuring inflation control in the first seven months. By the end of July 29, 2016, total means of payment rose 9.45 per cent and deposits grew up 9.94 per cent (specifically, dong deposits rose 12.28 per cent and deposits in foreign currencies slipped 6.25 per cent) from the end of 2015. The liquidity of credit institutions continued to be guaranteed and interbank interest rates lowered from the end of last year.
Mr Nguyen Tien Dong, Director of the Credit Department, SBV, said, the credit growth climbed 8.54 per cent in the first seven months of 2016. Credit continued to be focused on priority areas. Agricultural and rural loans, exclusive of loans provided by policy banks and development banks, reached VND900 trillion by the end of July, up 6.1 per cent from a year earlier. Loans to exporters increased 3 per cent and loans to small and medium-sized enterprises (SMEs) looked up 3.3 per cent.
Remarking on credit growth, SBV Deputy Governor Nguyen Thi Hong said, basing on the target GDP growth of 6.7 per cent and an inflation growth of 5 per cent or lower in 2016 set by the National Assembly, the SBV actively adopted measures in support of macroeconomic stability and inflation control. The central bank expected a credit growth of 18 - 20 per cent and total liquidity growth of 16 - 18 per cent this year. According to the strategy from now till the end of the year, the SBV will continue to keep abreast of monetary objectives and use flexible monetary policy tools. It will regulate the market mainly with open market operations, termed refinancing with reasonable volume and interest rates to support liquidity and capital for credit institutions while still guaranteeing the inflation control target, she said.
In response to recent warnings by experts of bad debts at VAMC, Mr Doan Van Thang, Deputy General Director of VAMC, said that the biggest difficulty that VAMC is encountering lies right in the debt trading market. Specifically, according to current laws, the sale of bad debts of State companies can only performed by units authorised to trade bad debts. This condition constitutes a big obstacle for VAMC, or Vietnam Asset Management Company in full.
Data from the central bank showed that bad debt ratio of the banking system was 2.58 per cent as of the end of June 2016, down from 2.78 per cent at the end of May 2016. According to data reported by credit institutions and VAMC, VND59.71 trillion of bad debts was tackled in the first six months of the year, down 14.55 per cent from the same period of last year. Specifically, VND8.88 trillion of debts was sold to VAMC, VND30.98 trillion of debts was repaid by customers, and VND7.24 trillion was covered by risk provisions for bad debts.
Besides, Thang added that debt trading and bad debt settlement was authorised to only VAMC, Debt and Asset Trading Corporation (DATC) and 28 asset management companies (AMCs) affiliated to commercial banks. However, as qualifications and management capabilities of AMCs affiliated to credit institutions are still generally quite weak, debt trading is mainly conducted by DATC and VAMC. However, Decree 69/2016/ND-CP of the Government on debt trading conditions is expected to make a change on the market and power up operations of debt trading companies, he said.
Anh Phuong
Vietnamese
