Friday, 19 Jul 2019

Vietnam’s credit growth hits 5-year low of 14% in 2018

Updated at Monday, 07 Jan 2019, 11:23
The Hanoitimes - The credit growth in the economy in 2018 is at five-year low, but it still helped the economy grow at a decade-high of 7.08%, VnExpress reported.
Total outstanding credit in Vietnam’s banking system grew 14% in 2018 year-on-year, the lowest since 2014, according to the State Bank of Vietnam (SBV). 
Data: SBV. Graphic: Nguyen Tung.
Data: SBV. Graphic: Nguyen Tung.
However, the Vietnamese economy grew at a decade-high of 7.08% last year. 

A representative of the Credit Department under the SBV said the credit structure has shift its focus towards manufacturing, especially in priority fields, while loans are tightened to sectors posing high potential risks. 

Upon breaking down, outstanding loans for trade and services sector rose the highest in 2018 by nearly 16%, followed by industry and construction with 12.1%, and agriculture with 8.8%. 

Additionally, amid rising rates in global markets, interest rates have also been stabilized, ranging from 6 – 9% per annum for short-term lending and 9 – 11% for mid- and long-term loans. 

As of the end of 2018, the banking system has resolved nearly VND150 trillion (US$6.47 billion) in bad debts, bringing the bad debt ratio down to 1.89% as per banks' balance sheets, from the rates of 2.46% in 2016 and 1.99% in 2017. 

The SBV is drafting new policies and legal framework to speed up the restructuring and handling of bad debts, with a view to completing the prime minister-approved cheme on restructuring credit institutions in association with dealing with bad debts for the 2016 – 2020 period. 

This would include the target of "having 12 - 15 commercial banks meeting Basel II standards by 2020". 

Basel II is a set of international banking regulations put forth by the Basel Committee on Bank Supervision, which leveled the international regulatory playing field with uniform rules and guidelines. 

Among the 10 commercial banks selected by the State Bank of Vietnam to pilot the application of Basel II standards, Orient Commercial Bank (OCB) and Tien Phong Bank (TP Bank) have met the target. 
Ngoc Thuy
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