US$8.8 billion of bad debts settled

SBV Deputy Governor Nguyen Thi Hong presides over the press briefing.

The State Bank of Vietnam (SBV) made the statement at a press briefing which took place in Hanoi on April 1, aiming to review the implementation of monetary policy and the performance of the banking system during the first quarter of 2019.

A SBV representative further said that as many as VND113.4 trillion (US$4.9 billion) worth of bad debts were handled in 2018.

The central bank will continue to step up and closely monitor the restructuring of credit institutions in association with the settlement of bad debts. Simultaneously, stronger efforts will be made to keep on improving credit quality and settling bad debts in accordance with market principles, as well as completing the legal framework for handling bad debts and restructuring credit institutions.

Noticeably, the settlement of bad debts would be associated with the implementation of measures on preventing and minimizing new non-performing loans (NPLs) and working towards bettering credit quality.

In a resolution released at the start of the year, the Government asked for implementing legal regulations, including the Resolution No. 42 on tackling bad debts of credit institutions, the revised Law on Credit Institutions and the Government’s project on restructuring the system of credit institutions associated with bad debt settlement until 2020.

Under a banking development strategy approved last August, the central bank will look to cut the ratio of bad debts to below 3 per cent of the total outstanding loans by 2020.

Regarding payment issues, Pham Thanh Ha, head of the SBV Department of Monetary Policy, said that the total means of payment increased by 2.67 per cent by March 25, while credit growth was estimated at 2.28 per cent against the end of 2018, primarily poured into business operations and prioritized fields.

In the first quarter of 2019, the SBV took a number of drastic measures to loosen credit growth for production and consumption as well as those aimed to handle “black” credit.

The SBV issued an official dispatch defining credit growth targets for each credit institution, with high targets prioritized for the credit institutions that implement regulations on the capital adequacy ratio as prescribed in Circular No. 41 ahead of schedule.

It also regulated and stabilized interest rates in formity with macroeconomic trends and developments while directing credit institutions to review their balance sheet in order to put forward a reasonable lending rate.

Deposit and lending rates maintained their stability while the rates on short-term loans ranged from 6 to 9 per cent a year. Those for medium and long-term loans stood at between 9 and 11 per cent a year.

The foreign currency market and exchange rates in particular remained stable, buoyed by the abundant supply of foreign currencies and good market liquidity. Credit institutions continued to net purchase foreign currencies from customers, thus supplementing the national foreign exchange reserves.

Nguyen Thi Hong, SBV Deputy Governor, noted that in the coming time, monetary policy will be implemented in line with the targets set for increasing the total means of payment by some 13 per cent and credit growth at around 14 per cent.

Efforts will continue to control interest and exchange rates in accordance with macroeconomic stability, market developments, and the objectives of monetary policy. These would also be combined with monetary policy instruments for the purpose of stabilizing the foreign currency market.