Governor says credit growth target at 18-20% obtainable

12:00 | 20/07/2017

HANOI – The banking sector is likely to obtain credit growth rate at 18-20% this year as requested by the Government thanks to rate cut policies, said Governor of the State Bank of Vietnam Le Minh Hung.

Governor of the State Bank of Vietnam Le Minh Hung speaks to a working group of the Government - PHOTO: TL

Speaking to a working group of the Government on July 18, Hung said many lenders have lowered short-term lending rates for priority sectors by 0.5 percentage point after the central bank announced policy rate cuts.

Some banks have launched credit programs offering lending rates from 5-6.5% per annum to enterprises. They are going to cut medium and long-term rates further for a number of sectors to around 8% and short-term rates for individual customers having a good credit history to 4-5% per annum.

At the end of June, credit had increased 9.06% year-on-year. Banks focused on business and production activities, in which credit for the agricultural and rural sector advanced 9.9% and the industrial sector up 10.34%. Loans for risky industries were strictly controlled via supervision and warning.

The banking sector may reach credit growth target at 18-20% as per the Government’s plan. However, credit quality should be raised so that capital could reach the production and business firms and prioritized sectors, Hung said.

For high-tech agriculture, banks have committed to lend VND120 trillion, in which nearly VND33 trillion has been disbursed. However, there have been problems in property collaterals.

Regarding cross ownership at Vietcombank, the governor said that Vietcombank still holds stakes at other lenders to facilitate restructuring at those banks. However, Vietcombank will have to divest capital as regulated.

The central bank has requested lenders to speed up cross ownership elimination. However, their capital divestment depends on objective conditions such as the selection of buyers and market price, the governor said.

The central bank has submitted to the Prime Minister solutions to deploy the National Assembly’s bad debt settlement resolution. If the measures are approved, the agency will hold a conference to announce the measures, making sure that application of the solutions is a key task of the banking sector in the coming time.

In addition, the central bank will launch solutions to improve payment safety and operations of the automated teller machine (ATM) system and streamline lending procedures.

Minister and Chief of the Government Office Mai Tien Dung said the working group appreciated the central bank’s monetary policies in the first half of 2017 and local banks’ cost saving determination to lower lending rates for enterprises.

Governor Hung also said that macro management measures in recent years have been effective, helping converted foreign currencies into Vietnam dong. In 2016, the central bank purchased nearly US$10 billion to raise foreign reserves, with a large part mobilized from citizens.

People invested their dong holdings into production and business or deposited at banks. Besides, the nation did not spend foreign currencies on gold imports due to low demand in the local market, he added.

Tu Hoang

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