Tag: credit institutions

The State Bank of Vietnam releasing its survey on business trends of credit insitutions in 2025.

Amended law adds new regulations on ownership and credit limits.

Decision issued to establish committee for restructuring credit institution network.

Credit policy, interest rates, and exchange rates of the central bank were the most important factors in 2022.

Credit institutions continue to expect that deposit and lending interest rates will increase in the fourth quarter. A survey by the State Bank of Vietnam found that 59-61 per cent of credit institutions expect an average interest rate increase of 0.37 percentage points in the quarter.

Banks involved in handling poorly-performing credit institutions, reducing lending interest rates to support businesses and individuals, and controlling credit in potentially risky areas have all had their credit growth limits adjusted by the State Bank of Vietnam. According to the World Bank, Vietnam’s credit-to-GDP ratio is among the highest in the world; a warning to the country about the potential risk of macro instability.

According to the Ministry of Finance (MoF), corporate bonds are mostly purchased by credit institutions and securities companies, who often then sell them on to individual investors, resulting in the volume of bonds held by these investors standing at 32.6 per cent. In order for the bond market to develop transparently and effectively, the MoF will report to the National Assembly on amending a number of provisions in the Law on Securities and the Law on Enterprises.

The draft amended Law on Electronic Transactions will play an important in promoting faster digital transformation in Vietnam. Many provisions in the draft, however, pose difficulties for credit institutions.

According to a State Bank of Vietnam (SBV) survey, although credit institutions believe that credit demand will continue to improve in the second half of 2022, the SBV’s operating point of view is still relatively cautious in the face of inflationary pressure as well as the devaluation of the VND. It emphasized maintaining credit growth in 2022 at 14 per cent.

The State Bank of Vietnam (SBV) is researching a decree on a controlled trial mechanism for financial technology (fintech) activities in the banking sector, for submission to the government for promulgation this year. The central bank will also focus on helping credit institutions and foreign bank branches in Vietnam receive foreign aid and concessional loans to finance projects on the green classification list.

A Circular from the State Bank of Vietnam (SBV) on allowing credit institutions to restructure debt repayment terms and exempt or reduce interest rates and fees in order to support customers affected by Covid-19 became effective on June 30. Banks actively setting up risk provisions has eased concerns over bad debts due to Covid-19.

A number of credit institutions have recently provided large consumption loans to individual customers that are actually for real estate. According to the State Bank of Vietnam (SBV), this is potentially risky if there are fluctuations in the real estate market. It is therefore expected to issue new regulations to tackle lending for real estate that is disguised as other lending.

It has been forecast that the bad debt ratio in the banking system may increase in the near future as Covid-19 is still to be brought under control. While waiting for the Law on Handling Bad Debts of Credit Institutions to be developed, the State Bank of Vietnam (SBV) has proposed extending the application period in Resolution No. 42, on handling the bad debts of credit institutions, by three years, to August 15, 2025. Resolution No. 42 from the National Assembly is valid for five years from August 15, 2017.

Credit institutions are expected to “slightly loosen” overall credit standards this year and focus on priority sectors and industries such as wholesale, retail, import and export, construction, and consumer lending, while tightening them on “high-risk” sectors such as securities and real estate.

At an online discussion at the National Assembly’s extra-ordinary session on January 7 on the draft Resolution on fiscal and monetary policies to support the socio-economic recovery and development program, State Bank of Vietnam (SBV) Governor Nguyen Thi Hong said that, under the law, the central bank cannot force credit institutions to reduce profits to cut interest rate costs, and that it will flexibly use other tools such as reserve requirements.

Investment and development funds in Vietnam to access many advantages under French Development Agency and Association of Development Financing Institutions in Asia and the Pacific program.

The State Bank of Vietnam and credit institutions have actively promoted solutions to help enterprises overcome the impact of Covid-19 since it first broke out in the country. The accumulated amount of interest exemptions and reductions for enterprises from January 23, 2020 to June 14, 2021 is VND18.27 trillion ($793.6 million). Such exemptions and reductions are expected to continue to rise.