Credit growth in 2023 is expected to reach about 13.5%

On January 3, speaking at a press conference on the implementation of the Banking Tasks in 2024, Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu said that 2023 will take place with many difficulties and challenges in the context of slow world economic growth, high inflation, and declining global trade;

Basic commodity prices fluctuate strongly, 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....

On the basis of closely following the Resolutions of the National Assembly and the Government, on January 17, 2023, the State Bank of Vietnam issued Directive 01/CT-NHNN requesting units in the whole industry to seriously implement solutions to manage monetary policy (CSTT) and banking activities in 2023.

Besides, the State Bank has seriously implemented the direction of the Government and the Prime Minister, proactively followed the developments of the macro economy and currency to promptly adjust policies;

Issue and implement synchronously and optimally management tools and solutions, contributing to stabilizing the macro-economy, controlling inflation, supporting economic growth recovery and ensuring the safe development of the credit institution system.

Finance - Banking - Credit growth in 2023 reaches about 13.5% — Deputy Governor of the State Bank of Vietnam Dao Minh Tu deploys the banking tasks in 2024.

Specifically, over the past year, the SBV has managed monetary policy to help stabilize the macro-economy, controlling inflation at around 3.2-3.4%. It has supported liquidity for credit institutions, stabilized the money and foreign exchange markets, and the SBV has purchased foreign currencies to increase the state's foreign exchange reserves.

Stable inflation and increasing foreign exchange reserves are factors contributing to Fitch's upgrade of Vietnam's national credit rating.

In 2023, the State Bank of Vietnam continuously adjusted the operating interest rates down 4 times, with a reduction of 0.5-2%/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%/year compared to the end of 2022.

The State Bank has also flexibly managed exchange rates, in line with domestic and international situations, contributing to absorbing external shocks, stabilizing the foreign exchange market and limiting large short-term fluctuations in exchange rates, stabilizing the value of the currency; liquidity is smooth, and legitimate foreign currency needs are fully met.

In addition, the State Bank has proposed many solutions, policies and credit programs that have been implemented synchronously and drastically, 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.

In particular, focusing on perfecting the legal framework for lending, simplifying procedures, reducing loan applications, promoting connections between banks and businesses nationwide; increasing special credit programs and products, incentives..., creating more favorable conditions for people and businesses to access bank credit.

Many credit programs have been deployed to effectively implement social policies, contributing to the successful implementation of three national target programs on sustainable poverty reduction, new rural construction, and socio-economic development in ethnic minority and mountainous areas.

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

Thanks to the proposed measures, the stability and safety of the credit institution system continues to be maintained, and the legitimate rights of depositors are guaranteed.

Bad debt is focused on handling and controlling in the context of economic and business difficulties, affecting the debt repayment ability of enterprises.

Non-cash payment indicators have positive growth; in 2023, the number of non-cash payment transactions will increase from 50.3-99.1%, the value will increase from 5.4-10.8% depending on the payment method; payment systems will operate stably, smoothly and safely.

The banking industry is also a pioneer in digital transformation; many products and services provided to customers have been digitized, of which many operations have been 100% digitized, contributing to supporting access to banking services, reducing costs for the economy, and improving national competitiveness.

The legal system on currency and banking activities continues to be focused on completion, both ensuring the banking system operates safely and closely following practical requirements, responding promptly to international trends, standards and practices.

Credit growth target for 2024 is about 15%

In 2024, the global economic outlook and international markets will continue to be complex. Domestically, the economy is expected to continue to face many difficulties and challenges. In that context, the SBV focuses on the following key orientations and solutions:

Closely monitor developments and the world and domestic economic situation to proactively, flexibly and synchronously manage monetary policy tools, and coordinate harmoniously and closely with other macroeconomic policies to support economic growth associated with inflation control, contributing to stabilizing the macro economy, the monetary and foreign exchange markets and the banking system.

Manage interest rates in line with market developments, macroeconomics, inflation and monetary policy targets; encourage 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. Manage exchange rates flexibly to stabilize the foreign exchange market, contributing to macroeconomic stability.

Credit management is proactive, flexible, in line with macroeconomic developments, inflation, meeting capital needs for the economy. Credit growth orientation in 2024 is about 15%, with adjustments in line with developments and actual situations.

Finance - Banking - Credit growth in 2023 will reach about 13.5% (Figure 2). — The State Bank targets credit growth in 2024 at about 15%.

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 sectors with potential risks.

Continue to promote the implementation of assigned tasks of the banking sector in the National Target Programs. Create favorable conditions for businesses and people to access bank credit capital, remove and promote the expansion of consumer credit in parallel with safety and health, contributing to limiting "black credit".

Continue to effectively implement the Project on restructuring the system of credit institutions associated with handling bad debts in the 2021-2025 period; focus on effectively implementing the plan to handle weak credit institutions.

Direct credit institutions to step up the handling and recovery of bad debts; strive to have the on-balance sheet bad debt ratio (excluding weak commercial banks) below 3% by 2024.

Actively innovate and enhance the effectiveness and efficiency of inspection, examination and supervision of the banking sector; conduct focused and key inspections of areas with potential risks to prevent, detect and strictly handle risks, problems and violations of credit institutions, contributing to ensuring security and discipline in the monetary and banking markets.

Continue to promote digital transformation in banking and e-commerce activities, meeting the requirements for new business models and products and services on the basis of information technology, digital banking, and digital payment. Strengthen security and safety in payment activities and digital transformation.

Continue to perfect the banking legal system to create a synchronous and favorable legal basis for monetary policy management and banking operations.

Continue to coordinate with the National Assembly agencies to complete the draft Law on Credit Institutions (amended) to submit to the National Assembly at the nearest session. Develop, submit for promulgation/promulgate detailed legal documents after the Law on Credit Institutions (amended) is promulgated .

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