'Interest rates have dropped to their lowest level in 20 years'

Speaking at the press conference to deploy banking tasks in 2024 on the morning of January 3, Mr. Dao Minh Tu, Permanent Deputy Governor of the State Bank, said that 2023 will take place with many difficulties and challenges in the context of slow world economic growth, high inflation, declining global trade, strong fluctuations in basic commodity prices, geopolitical conflicts; Central banks of many countries continue to keep operating interest rates at high levels.

Domestically, growth drivers for exports, investment, and consumption are all facing challenges due to low global demand; businesses are facing many difficulties due to declining orders and markets...

'Mặt bằng lãi suất đã giảm thấp nhất trong 20 năm qua'- Ảnh 1. — Overview of the press conference

Credit growth reached about 13.5%

On the basis of closely following the resolutions of the National Assembly and the Government, according to Mr. Tu, the banking industry has achieved some outstanding results.

Firstly, monetary policy management has contributed to stabilizing the macro-economy, controlling inflation at around 3.2 - 3.4%. It has supported liquidity for credit institutions, stabilized the monetary and foreign exchange markets, and the State Bank has purchased foreign currency to increase the state's foreign exchange reserves.

Second, the operating interest rates were continuously adjusted down four times, with a reduction of 0.5 - 2.0%/year in the context of world interest rates continuing to increase and anchor at high levels, creating conditions to reduce the market lending interest rate level.

At the same time, direct credit institutions to reduce costs and synchronously apply measures to reduce lending interest rates. To date, deposit and new lending interest rates of commercial banks have decreased by about 2.0%/year compared to the end of 2022.

"It can be said that, up to this point, lending interest rates have dropped very low, including short-term, medium-term, and long-term; including non-priority sectors. The interest rate level has dropped to its lowest level in the past 20 years.

At the beginning of the year, the interest rate issue was very fierce, and in the middle of the year, the interest rate continued to be fierce, how to reduce interest rates for businesses. Of course, policies have delays and specific characteristics, it cannot be said that today the interest rate is this and tomorrow it will be reduced to 2% or 3%. That will create a deficit in the financial system of credit institutions," Mr. Tu emphasized.

The State Bank's leaders also mentioned the flexible management of exchange rates, in accordance with the domestic and international situation, contributing to absorbing external shocks, stabilizing the foreign exchange market and limiting large short-term fluctuations in exchange rates, stabilizing the currency value; smooth liquidity, and fully meeting legitimate foreign currency needs.

Many solutions, policies and credit programs have been implemented synchronously and drastically by the State Bank, focusing all resources to ensure sufficient capital supply for the economy, promote economic growth of about 5% (lower than the set target but a high growth rate in the world), support businesses and people to overcome difficulties and restore production and business.

With the system of synchronous instructions and solutions of the State Bank, by the end of 2023, credit growth will reach about 13.5%...

Tightly control credit in potentially risky areas

In 2024, the global economic and international market outlook continues to be complex. Domestically, the economy is expected to still face many difficulties and challenges.

In that context, Mr. Dao Minh Tu emphasized that the State Bank focuses on managing interest rates in accordance with market developments, macroeconomics, inflation and monetary policy targets; encourages credit institutions to reduce costs, simplify credit granting procedures, increase the application of technology and digital transformation in credit granting processes, and strive to reduce lending interest rates to support the economy...

In addition, credit management must be proactive and flexible, in line with macroeconomic developments and inflation, to meet capital needs for the economy. The credit growth target for 2024 is about 15%, with adjustments to suit developments and actual situations.

Continue to direct credit institutions to direct credit to production and business sectors, priority sectors and growth drivers (investment, consumption, export) according to the Government's policy; strictly control credit to potentially risky sectors.

Create favorable conditions for businesses and people to access bank credit capital, remove and promote the expansion of consumer credit in a safe and healthy manner, contributing to limiting black credit.

In addition, the State Bank will continue to decisively and effectively implement the Project on restructuring the system of credit institutions associated with handling bad debts in the 2021-2025 period; focusing on effectively implementing the plan to handle weak credit institutions.

Directing credit institutions to step up the work of handling and recovering bad debts; striving for the ratio of bad debts on the balance sheet (excluding weak commercial banks) to be below 3% by 2024...

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