Banking sector performance in 2019 and tasks for 2020

The recent conference on the tasks of the banking sector in 2020

Prime Minister Nguyen Xuan Phuc made these assessments about the banking sector’s performance last year on the first days of 2020 at a recent conference on implementing the banking sector's tasks in 2020.

In the premier's words, last year the [Vietnam-US dollar] exchange rate was fairly stable. The interest rate trending downward was a bright point, while the bad debt ratio was also declining.

Significantly, foreign currency reserves approximated $80 billion, nearly six times the figure in 2011.

Addressing the conference, the premier underlined the banking sector’s important role in securing the country’s prosperity.

The premier stated that for a thriving and powerful Vietnam, the country must maintain a high and stable growth rate in the forthcoming decades. The sectors at all levels, particularly the banking sector, need to contribute to this prosperity.

According to the central bank's (SBV) recent report, credit growth in the banking sector surpassed 13 per cent on-year in 2019, meaning that credit growth nearly doubled economic growth, attesting to significantly enhanced credit efficiency.

Last year also witnessed continual interest rate reductions in the banking sector. For instance, in September 2019, the SBV simultaneously curtailed key interest rates by 0.25 per cent, such as the refinancing interest rate, the rediscounting interest rate, and the overnight rate in inter-bank electronic payments.

According to SBV Governor Le Minh Hung, foreign currency reserves touching nearly $80 billion is of great significance to national security, helping to consolidate the confidence of domestic and foreign investors in the capacity of the Vietnamese government and the State Bank.

The premier, however, cautioned that many obstacles exist in solving bad debts and further efforts must be made as bad debts tend to increase in the coming time as firms continue to face difficulties and the world financial market remains unpredictable.

The activities of ensuring security and safe banking operation are facing increasingly complicated risks associated with fraudulent practices and hawker attacks, leading to the leaking of personal information or losing money on bank accounts, eroding banks' reputation.

The management of new fields such as virtual currency and assets, fintech, and AI has posed many challenges, demanding joint efforts from sectors at all levels, in which the SBV holds a vital role.

In this situation, the prime minister requires the State Bank to continue taking the initiative and remain flexible in monetary policies, ensuring effective and seamless co-ordination with fiscal policies and other policies to stabilise the economy, control inflation, support production and business, and promote growth.

The premier also expressed the desire that more and more local banks would join the list of top regional and global performers.