Credit declines sharply due to COVID-19

Credit grew only 1.96% as of May 29 as compared with late 2019, due to the impact of the COVID-19 pandemic, according to Deputy Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong.

credit declines sharply due to covid-19 hinh 0

Speaking at a recent press conference, Hong further said in the first five months of 2019, credit growth reached 5.74% and the present pace is far from the yearly target of 14%.

Credit continues to be poured into production and business, and key sectors like export (up 4.94%), hi-tech (2.92%), and support industry (2.27%).

The central bank has adopted solutions to remove difficulties in production and business, especially agriculture that has been affected by natural disasters and diseases.

Hong said the bank has assigned relevant departments to review the target of 14% that was set in late 2019 when the pandemic had yet to break out, noting that it would be adjusted when necessary.

The SBV will continue to direct capital flows to priority business sectors, the Deputy Governor added.

Ha Thu Giang, deputy head of the SBV’s Credit Department, as of May 25, the banking sector had restructured debt payments for nearly 224,000 clients with total outstanding loans amounting to nearly VND152 trillion (US$6.51 billion), as well as exempted and reduced interest rates for over 326,000 others with combined outstanding loans of more than VND1.14 quadrillion.

The Vietnam Bank for Social Policies has also extended debt payment deadlines for 150,714 customers, restructured debt payments for 75,209 others, and granted fresh loans to 680,031 clients.

In March and May, the SBV adjusted down policy rates by 1-1.5% per year to support commercial banks and reduced interest rate ceilings by 0.6-1% per year for key sectors.

Hong said the central bank will adjust the policy rates on the basis of the national economic situation, especially inflation, and continue to manage monetary policies in combination with macro-economic policies in an effort to control inflation, stabilise the macro economy, the monetary market and remittances.