Deputy Governor of SBV: Interest rates are falling

	Bank lending interest rates will be cut at appropriate time: SBV chief
	State Bank explains why lending interest rates are still high
	SBV Governor explains high lending rates, credit room management

Deputy Governor of the State Bank of Vietnam Pham Thanh Ha.

On the afternoon of June 3, at the regular Government press conference, answering a question about the situation that some banks have used up their credit growth limit (room) while some banks still have it, Mr Pham Thanh Ha, Deputy Governor of the SBV, said that since the beginning of the year, the overall credit growth target had been around 14-15% and has been properly allocated to banks.

By the end of May, the economy's credit reached over VND 12.8 million billion, an increase of over 3.17% compared to the end of 2022.

According to the Deputy Governor, the credit market share accounted for about 44% of state-owned commercial banks, but the growth was only about 35% compared to the level assigned by the State Bank. Meanwhile, the joint stock commercial banks group accounted for about 44% of the market share, but growth only reached about half of the assigned rate.

"These two groups account for about 91% of the credit market share, and there is much room for growth for the rest of the year," said the Deputy Governor.

Further analyzing the credit issue, according to the Deputy Governor of the SBV, in 2022, credit will increase by approximately 8% compared to the end of 2021. Thus, in the condition that the credit policy of the State Bank does not change, the only Credit growth target in 2022 is 14%, this year is a little bit closer, from 14% to 15%, but credit growth is so low, it is clear that the capital absorption of the economy is weak, significantly weaker than last year.

Mr Pham Thanh Ha said there are three main reasons, including manufacturing enterprises having difficulty in output and consumption and a lack of orders, leading to a decrease in demand for new loans for production. In addition, small and medium-sized enterprises, most of which face a weak financial situation, do not have a feasible plan, so they have not met the conditions for accessing bank loans. In addition, related to real estate credit, due to the difficult market, few new projects have been implemented, supply shortage, and reduced demand for large loans.

Faced with this situation, a State Bank of Vietnam representative said that the banking industry's solution is to continue directing banks to reduce lending rates. Specifically, the State Bank of Vietnam has three times reduced the operating interest rate from March to May. New loans' average lending interest rate was 9.07%, down 0.9% compared to the end of 2022.

"With data like this, we believe that the interest rate level is decreasing and will o decrease soon," said Deputy Governor Pham Thanh Ha.

For existing outstanding loans, due to customers facing difficulties in repayment, the SBV issued Circular No. 02/2023/TT-NHNN allowing debt restructuring and keeping the debt group intact. Therefore, the SBV will continue directing organizations to implement this policy to support outstanding business loans. With new outstanding loans, banks and credit institutions must continue actively lending to qualified customers.

"It is. The banking system mobilizes capital to lend, so qualified customers will certainly have access to credit," said SBV Deputy Governor.

In addition to banking solutions, Deputy Governor Pham Thanh Ha said that the solution to increasing the economy's demand is very important. Therefore, ministries and sectors need to continue to promote policies to support enterprises, develop small and medium-sized enterprises, promote, search, develop, and remove difficulties in the consumption market, the real estate market, etc. real estate, thereby removing difficulties for businesses as well as improving financial capacity, improving access to credit.

At the regular Government meeting in May 2023 taking place on the same day, Prime Minister Pham Minh Chinh assigned the State Bank to continue monitoring the implementation of Circulars 02 and 03, if any problems arise, make timely adjustments time, continue to implement solutions to reduce lending costs and interest rates (both old and new); increasing access to capital, ensuring reasonable credit growth, targeting growth drivers and priority areas; focus on handling weak banks, ensuring liquidity, system safety, handling bad debts; promoting credit packages such as a credit package of VND 120,000 billion for social housing development.