Proactive credit provision
The Government has just issued Resolution 01 on key tasks and solutions to implement the 2024 Socio -Economic Development Plan. One of the 12 key tasks and solutions stated in the Resolution is to continue to operate monetary policy proactively, flexibly, promptly and effectively to meet the capital needs of the economy.
Recently, at the online conference to deploy tasks for 2024, State Bank Governor Nguyen Thi Hong said that with the growth target of 15%, it is estimated that about 2 million billion VND of capital will be pumped into the economy this year. The State Bank will continue to direct credit to production and business sectors, priority sectors according to the Government 's policy. At the same time, strive to reduce lending interest rates to support economic recovery.
Credit targets for each bank are calculated based on many factors such as growth in the previous year, ratings of commercial banks, whether the bank prioritizes capital for priority sectors, economic growth drivers, etc.
Mr. Nguyen Xuan Thong - Director of the North Central region of VIB International Bank said that the early allocation of credit limits has helped the bank to immediately decide to allocate large resources for lending to small and medium enterprises. Many loans may not even require collateral and can be implemented immediately if the enterprise shows cash flow through its orders. In addition, many commercial service loans during Tet will be reduced to a low level.
Mr. Tran Minh Tinh - Director of BIDV Bank Nghe An Branch also said: Previously, the State Bank often divided into many periods of expanding credit "room", but now it provides credit right from the beginning of the year. Allocating the full credit limit early helps banks have a plan for the whole year to allocate loans to target customer groups and seasonal industries in the spirit of ensuring growth associated with system safety.
In 2023, the business activities of many credit institutions will face unexpected difficulties. The negative impact of the world economy and the domestic economy will lead to a sharp decrease in credit demand, credit growth will face many difficulties; competition between commercial banks and credit institutions will become increasingly fierce...
According to the State Bank of Vietnam, Nghe An Branch, by December 31, 2023, the mobilized capital in Nghe An is estimated to reach VND 225,764 billion, an increase of VND 25,973 billion compared to the beginning of the year, equivalent to 13%. However, the outstanding loans of credit institutions in the area only increased by 8.8% (the growth rate in 2022 is 11.9%). Therefore, this year, the early issuance of credit limits from the State Bank helps banks have a yearly plan to allocate loans to target customer groups and seasonal industries.
Focus on solutions to increase outstanding debt
The credit limit was fully assigned at the beginning of the year due to the risk of total capital demand decreasing in 2024 and the risk of bad debt in banks increasing. Although the bad debt ratio of Nghe An Banking industry is maintained at a low level (below 2%) compared to the general level of the whole country, in 2023 there were signs of an increase.
According to aggregated data, by December 31, 2023, the total bad debt of banks in the area is estimated at VND 4,882 billion, accounting for 1.65% of total outstanding debt, while the bad debt ratio at the end of 2022 is 0.53%. Early credit limit allocation will be a solution to help banks be proactive and have a long-term plan in providing capital to the market, contributing to promoting credit growth and economic development.
At Agribank Nghe An Branch, in 2024, the target of mobilized capital growth is from 7% - 13%; outstanding loans grow from 7% - 11%, depending on the scale of the transaction office. The ratio of outstanding loans to agriculture and rural areas is over 65% of total outstanding loans. Currently, the allocation to seasonal fields during the Lunar New Year and the first quarter has been implemented.
Ms. Duong Thi Thu Hien - Director of Agribank Nghe An Branch said: Promoting the positive results of 2023, this year, we are actively looking for customers to expand lending; resolutely directing credit growth from the beginning of the year in conjunction with customer orientation and target products, ensuring safety and efficiency. Surveying businesses operating effectively in the area, having good business plans and projects to approach loans, trying to stabilize our customer base. We also focus on exploiting individual household customers to increase credit investment, capture market share, and further enhance the key role in credit investment for the agricultural and rural sectors.
To effectively implement the credit growth target in 2024, the leader of the State Bank of Nghe An Province Branch said that the unit continues to direct and effectively implement key tasks and solutions under the direction of the Government, the Governor of the State Bank and the Provincial People's Committee. Strictly implement the instructions on credit and interest rates, deploy credit packages to fully and promptly meet the capital needs for production and business, serve the living needs and legitimate consumption of people and businesses, strive to increase credit growth while controlling credit quality. Continue to implement solutions to support people and businesses, focusing on implementing the policy of restructuring debt repayment terms and maintaining the debt group in accordance with the provisions of Circular 02/2023/TT-NHNN to create favorable conditions to support businesses and people. Link the growth of banking activities with the goals and tasks of socio-economic development of the province; Deploy various types of services to exploit the economic potentials and strengths of the province, effectively supporting local economic growth.
Currently, the mobilization interest rate is at its lowest level in history, which is the basis for the continued reduction of lending interest rates. The remaining issue is the health and operational capacity of enterprises and the support, facilitation and bold lending from banks.
In 2023, outstanding loans in some industries such as wholesale, retail, auto and motorbike repair accounted for 29% of total outstanding loans, an increase of 6.2% compared to the beginning of the year; processing and manufacturing industry accounted for 20% of total outstanding loans, an increase of 10% compared to the beginning of the year; agriculture, forestry and fishery accounted for 16% of total outstanding loans, an increase of 3% compared to the beginning of the year; Activities of hiring jobs in households, production of material products and services for self-consumption of households accounted for 9%, an increase of 2.87% compared to the beginning of the year; Real estate business activities accounted for 4% of total outstanding loans in the whole area, an increase of 5.3% compared to the beginning of the year.
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