Credit grew 5% in the first four months of the year, Pham Thanh Ha, director general of the Monetary Policy Department of the State Bank of Vietnam, told a banking forum in Hanoi on May 8.

Delegates are seen at the banking forum in Hanoi on May 8

The forum on the banking sector’s sustainable development was organized by the Saigon Times Group in coordination with the State Bank of Vietnam.

Ha said that while credit growth is normally low, at 3-3.5%, in the early months due to less manufacturing activity during the Lunar New Year holiday, the 5% loan growth in January-April this year and last was significant.

This shows that loans have grown steadily since the start of the year, he said, adding credit has been channeled into sectors that have driven up economic development. As for high-risk sectors, the central bank has told commercial banks to take caution.

There is no need to adjust the credit growth target for now, Ha said. Credit growth for this year is set at some 17% by the central bank, and this target might be changed depending on market conditions.

Nguyen Duc Kien, head of the National Assembly Economic Committee, said in a panel discussion at the forum that the credit growth target is not mandatory. The central bank wants to stabilize the money market through this target, he noted.

Ha shared Kien’s view, saying the central bank always focuses on currency stabilization, inflation control and economic growth.

Addressing the forum, Nguyen Kim Anh, deputy governor of the central bank, said the restructuring of the banking sector is still ongoing.

Bad debt is being settled to make banks healthier and more sustainable, Anh said, adding monetary policy of the central bank has helped stabilize the macro economy, fuel economic growth, put inflation under control, and stabilize the money market. 

Pham Huyen Anh, deputy chief inspector of the central bank, said bad debt at credit institutions late last year was below 2.46% in end-2016. However, restructuring and settling bad debt has encountered many difficulties, he added.

Banking expert Can Van Luc said the settlement of bad debt and assets used as collateral for loans has been obstructed by property transfer tax. “We have asked the Ministry of Finance to work with the Ministry of Natural Resources and Environment to provide guidance for this matter.”

According to Luc, coordination among relevant ministries is crucial and guidelines should come out early. He emphasized the need for commercial banks to add more capital as soon as possible. Credit has grown 15-17% over the years but equity growth has been limited to 8-9%.

SGT