By early September 2023, the outstanding debt of Ha Tinh's banking sector was estimated at VND 89,560 billion, an increase of about 2.71% compared to the end of 2022. Compared to the target set by the industry in 2023 of credit growth of 14 - 16%, this figure is still too modest.
Banks find it difficult to generate new debt.
In recent times, the State Bank of Ha Tinh province has regularly directed credit institutions in the area to direct credit to production and business sectors, priority sectors and economic growth drivers according to the Government's policy. At the same time, it has implemented solutions to create favorable conditions for customers to access credit capital such as: simplifying procedures and loan applications; calculating to reduce lending interest rates, making efforts to bring capital to the economy... but credit in the area still tends to grow slowly.
Vietcombank Ha Tinh Branch is currently having difficulty developing credit for individual customers.
At Vietcombank Ha Tinh Branch, the current growth of outstanding loans, especially outstanding loans to individual customers, is also a "difficult problem". It is known that the total outstanding loans of the entire branch to date have reached VND 13,160 billion, of which outstanding loans to individual customers have reached VND 5,600 billion (a decrease of about VND 300 billion compared to the beginning of the year).
According to Ms. Nguyen Thi Hanh - Head of Retail Customer Department, Vietcombank Ha Tinh Branch, due to the impact of the economic recession, the capital absorption capacity of customers, especially individual customers, is very modest. Although the unit has focused on supporting customers by reducing interest rates (current new loan interest rates are only 6 - 8%/year for production and business and 8 - 8.5%/year for consumption), the demand for loans is low, so developing new customers is still difficult. According to research, currently, the demand for loans for production, business and consumption of people has decreased. For production and business, people are suffering from the general difficulties of the economic recession, making it difficult to expand the scale of operations. As for consumption, due to the decrease in income from people compared to previous years, the demand for loans to buy cars, build houses, etc. has decreased sharply.
At ACB Ha Tinh Branch, outstanding loans as of early August 2023 reached over VND 3,153 billion, down 1.98% compared to the end of 2022. Analyzing the reasons for the delay in credit development, the branch representative said: After the COVID-19 pandemic, many businesses and cooperatives have not been able to recover production and business, and now continue to face many difficulties due to the impact of the economic recession, leading to very poor capital absorption.
Customers come to make transactions at ACB Ha Tinh Branch.
It is known that currently, joint stock commercial banks in Ha Tinh such as: SHB, SeaBank, MSB, Techcombank... are also finding it difficult to generate new outstanding debts, and many units have seen their outstanding debts continuously decrease sharply in recent months.
According to data from the State Bank of Vietnam (SBV) of the province, by early September 2023, outstanding loans of credit institutions in the area were estimated at VND 89,560 billion, an increase of about 2.71% compared to the end of 2022. Without fundamental solutions from many sides, the credit growth target of 14-16% in 2023 compared to the end of 2022 set by the Ha Tinh banking sector will be very difficult to achieve.
Absorbing bank capital flow of poor economy
In practice, the banking sector has implemented many solutions to reduce interest rates and increase the economy's ability to absorb capital. Since the beginning of the year, the State Bank of Vietnam has reduced operating interest rates four times by 0.5 - 2% per year. At the same time, the State Bank of Vietnam also set a ceiling on short-term lending interest rates for a number of priority sectors, including small and medium-sized enterprises, at 4% per year.
According to statistics, up to now, lending interest rates have been reduced quite sharply by commercial banks, many businesses have been proactively reduced by banks by 2-3%/year compared to the old interest rates. In addition, some banks apply preferential interest rates for certain customers and sectors... However, in reality, credit growth has not improved significantly.
Bank lending interest rates have now decreased by 2-3% compared to the beginning of the year.
At this time, businesses in Ha Tinh are also facing many challenges such as: decreasing orders, increasing input materials, increasing transportation costs... so the demand for loans has slowed down.
Song La Xanh Packaging Joint Stock Company (Duc Tho Industrial Park) specializes in manufacturing and exporting packaging to markets such as the Philippines, Singapore, Taiwan, New Zealand, etc. According to the company representative, the current difficulties that the company is facing are a decrease in orders, a narrowing of the product consumption market, leading to a decrease in revenue compared to the same period. When production and business are "gloomy", the business's demand for loans will be more limited than in previous periods.
Minh Loc Livestock, Synthesis and Construction Cooperative (Cam Minh Commune, Cam Xuyen) has specialized in raising commercial pigs on a large scale for many years. However, due to the long-term impact of low pork prices, rising feed prices and epidemic prevention costs, last July, the cooperative decided to lease the farm infrastructure to enterprises and only participate in contract farming.
Mr. Truong Xuan Binh - Chairman of the Board of Directors and Director of the Cooperative said: "In the past, we raised animals independently so we always needed a large amount of capital for investment, there were times when we borrowed tens of billions of VND from the bank. But now, the Cooperative has switched to contract farming, only needing to invest in repairing the barns so we almost do not need to borrow capital."
Minh Loc Livestock, General and Construction Cooperative has shifted from self-sufficient livestock farming to contract farming, so the need for bank loans for investment has decreased sharply.
According to experts' analysis, the main reason for slow credit growth is the weak capital absorption capacity of the economy in the context of a difficult market. Therefore, even if the interest rate level decreases sharply, credit will hardly increase dramatically. This raises the issue that, in addition to the interest rate reduction move of the banking sector, departments, branches, localities and the Ha Tinh Provincial Business Association need to get involved, promptly come up with solutions to remove difficulties, creating conditions for the business community and cooperatives to promote production and business.
Economic experts suggest that in the current period, it is necessary to focus on strengthening trade promotion activities, negotiating to expand and diversify markets, especially export markets. At the same time, strengthening solutions to boost domestic consumption, increase domestic demand for goods, continue to promote the movement "Vietnamese people prioritize using Vietnamese goods" ... to create growth momentum for domestic enterprises and "unblock" credit capital flows.
Thao Hien
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