Banking business takes on financial challenges

On the 2023 Vietnam Banking Discussion board held on Might 10, the consultants stated the banking system nonetheless has to primarily present capital for the entire economic system because the nation’s capital market continues to be insufficient. Vietnam’s credit-to-GDP ratio is at the moment at a really excessive stage. If Vietnam continues to keep up credit score development at a excessive stage as in earlier years, will probably be very dangerous for the nation’s banking system and the entire economic system.

Banking industry takes on economic challenges
Deputy Governor of the State Financial institution of Vietnam Pham Thanh Ha speaks on the discussion board – Photograph

Nguyen Quoc Hung, Common Secretary of the Vietnam Banking Affiliation, stated it’s at the moment troublesome for the State Financial institution of Vietnam (SBV) because it has to stabilise the macro-economy and management inflation in addition to supporting companies and financial development.

If the present difficulties of the entire economic system are placed on the banking business, companies will even face extra difficulties subsequent time when banks wrestle, Hung warned.

In accordance with Hung, though Round No 02/2023/TT-NHNN on debt rescheduling and retention of debt classes to help debtors has been issued, industrial banks nonetheless should take full accountability and make their very own choices on debt restructuring. Due to this fact, industrial banks could should burden all difficulties of the entire economic system.

Ha Thi Kim Nga, senior economist of the Worldwide Financial Fund (IMF)’s Resident Consultant Workplace in Vietnam, additionally stated the SBV is at the moment having to navigate a really troublesome stability between controlling inflation and avoiding a pointy slowdown in development, and on the similar time coping with uncertainties associated to the actual property market.

Nga really useful the SBV ought to depend on coverage rates of interest to regulate inflation and keep away from placing stress on the trade fee. On the similar time, the SBV ought to guarantee the soundness of the monetary sector when dealing with the bottlenecks of the bond and actual property markets.

SBV Deputy Governor Pham Thanh Ha stated amid an advanced and unpredictable worldwide atmosphere, a small and extremely open economic system like Vietnam needed to face many difficulties in harmonising contradictory targets.

Ha specified that the challenges had been supporting financial restoration whereas maintaining inflation in examine, lowering the depreciation of the native foreign money whereas maintaining rates of interest steady, and making certain the protection of the banking system whereas offering sufficient credit score for the economic system.

Within the first months of 2023, credit score development was very sluggish, but when credit score was loosened, there could be potential dangers, Ha famous.

In accordance with Ha, difficulties within the economic system embody these going through companies and banks. If banks assist companies at an appropriate stage, the economic system will get higher. Nonetheless, if banks assist companies by loosening credit score granting situations, and suspending or rescheduling mortgage cost time, the difficulties might be transferred to the financial institution.

“The companies’ want for rate of interest cuts is professional, and the banking business additionally doesn’t need excessive deposit and lending rates of interest. Nonetheless, we nonetheless should take note of the soundness of the macroeconomy and the banking system,” Ha stated.

On the discussion board, consultants stated as the worldwide economic system is going through many uncertainties whereas the home economic system is riddled with quite a few issues, collaboration between ministries, companies and localities is required to work out widespread options that may improve the connectivity between insurance policies and the effectiveness of financial coverage specifically.

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