Set targets might be unachievable without drastic efforts: PM

Analysts say that NIM in Vietnam has decreased in recent years because banks have set high deposit interest rates to compete for capital. In addition, they cannot raise the lending interest rate because of the monetary policy designed to stimulate the economy. Some commercial banks have even eased the lending interest rates in some preferential business fields to support economic growth. According to Phan Minh Ngoc, a renowned economist, the average NIM of Vietnamese banks was 2.4% at the end of 2016, lower than the 2.5% in 2015 and much lower than the 5.5% of Indonesian banks, 3% of Philippine and 2.9% of Thai banks. However, banks still live on lending. H1 finance reports show that most banks had net interest income on total income ratio of 75% or more. The reports of 10 large banks (Vietcombank, VietinBank, BIDV, SHB, MBB, Sacombank, ACB, VIB, VP Bank and Eximbank) show that the net interest income reached VND80.3 trillion in the first half of the year, up by 28.6% over the same period last year. Though the proportion of net interest income of total income of the banks has decreased from 81% to 79.8%, this is still relatively high. SHB has the highest proportion in the banking system, 92%. BIDV's ratio has increased from 75.4% to 83.4%. It has the highest net interest income, over VND14 trillion, among banks which have released H1 finance reports. Meanwhile, ACB is the bank which…... [read more]


The National Financial Supervision Commision has assessed in its financial report for July that declines in the interest rate for the rest of 2017 will be supported by both domestic and international factors. The pressure on the exchange rate is not high, with the value of the US dollar falling more than 7 percent compared to early this year, and the possibility of the US Federation Reserve raising its interest rate this year below 50 percent. At the same time, inflation is likely to stay below the National Assembly’s target of 4 percent, while only 25 percent of Government bond issuance plan needs to be fulfilled in the final five months of 2017. Interest rates for Government bonds of all terms also dropped 0.2-0.3 percentage points compared to the end of June, lower than the same period last year by about 1 percentage point, which also supports the cutting of banks’ interest rate, according to the committee. The committee also said that State policies have aided the interest rate’s reduction. The deposit interest rate has remained stable and the lending interest rate has been falling since the State Bank of Vietnam (SBV) reduced its prime interest rate and the ceiling rate of short-term loans for some sectors. Meanwhile, bad debt settlement has received favourable legal mechanisms, via the National Assembly Resolution 42/2017/QH14 on pilot settlement of bad debts and the Prime Minister's approval of a project to restructure credit institutions in tandem with bad debt tackling for 2016-2020. The committee…... [read more]

Illustrative photo (Source: VNA) Hanoi (VNA) – The National Financial Supervision Commision has assessed in its financial report for July that declines in the interest rate for the rest of 2017 will be supported by both domestic and international factors. The pressure on the exchange rate is not high, with the value of the US dollar falling more than 7 percent compared to early this year, and the possibility of the US Federation Reserve raising its interest rate this year below 50 percent. At the same time, inflation is likely to stay below the National Assembly’s target of 4 percent, while only 25 percent of Government bond issuance plan needs to be fulfilled in the final five months of 2017. Interest rates for Government bonds of all terms also dropped 0.2-0.3 percentage points compared to the end of June, lower than the same period last year by about 1 percentage point, which also supports the cutting of banks’ interest rate, according to the committee. The committee also said that State policies have aided the interest rate’s reduction. The deposit interest rate has remained stable and the lending interest rate has been falling since the State Bank of Vietnam (SBV) reduced its prime interest rate and the ceiling rate of short-term loans for some sectors. Meanwhile, bad debt settlement has received favourable legal mechanisms, via the National Assembly Resolution 42/2017/QH14 on pilot settlement of bad debts and the Prime Minister’s approval of a…... [read more]

According to analysts, when the economy has a high inflation rate, increasing interest rates (including basic interest rates from the central bank, mobilising interest rates and lending interest rates from commercial banks) and tightening foreign currency credit will help to curb inflation in many countries in the world. The regulation from the State Bank of Vietnam (SBV) for a basic interest rate of 14 percent per year is a good signal to attract more money out of circulation and slow down the hot credit growth. High interest rates – “a double-edged knife” Increasing interest rates is a necessary measure in the short-term to curb the inflation rate, limit credit growth and encourage people to deposit their money in the banks. When inflation is under control, it is a must for banks to adjust interest rates and other indirect tools properly. According to Dr Nguyen Minh Phong from the Hanoi Centre for Research and Socio-Economic Development, if interest rates are higher than the inflation rate, this will reduce inflation. However, too high interest rates will limit social investment, leading to unemployment and bankruptcies. High interest rates can also encourage the flow of foreign currencies into Vietnam to rise, leading to higher inflation. This will harm the national economy in the context of financial liberalisation under the commitments of international integration. Sharing this view, Dr Nguyen Thi Mui, deputy director from the Financial Institute said that the price hike in goods in recent times has affected most low-income earners but not had…... [read more]

There is no denying that the monetary policy plays a key role in developing the national economy. In 2008, the Government introduced a tight monetary policy to curb runaway inflation and at the same time stabilise the monetary market. According to economists, Vietnam carried out its monetary policy in two stages – the first lasting from the beginning of the year to April, and the second from May to the end of the year. Market management Before the eight-point solution package aimed at curbing galloping inflation was approved, commercial banks had intensified measures to withdraw cash from circulation by increasing interest rates. The State Bank of Vietnam (SBV) asked commercial banks to raise their compulsory reserves and buy SBV bonds. The SBV also limited the credit growth to 30 percent and provided support for the local stock market. Dr. Cao Si Kiem, deputy head of the National Monetary Advisory Council, says that monetary policy adjustment in 2008 had two big shortcomings. First, the timing of the adjustment was poor as most commercial banks were weak in terms of liquidity. They had difficulty in getting back their capital from loans provided to the stock and real estate markets. Second, commercial banks were put under pressure when they were asked to buy SBV bonds and increase their reserve requirement, resulting in rising interest rates. According to Prof. Vu Dinh Bach, head of the Economics Advisory Council under the Vietnam Fatherland Front, it’s thought that only banks played the leading role in curbing…... [read more]

In the face of price hikes and shrinking business and production operations, Vietnam has recorded certain socio-economic achievements over the past six months, generating approximately 720,000 jobs, meeting 45 percent of the yearly plan, maintaining steady industrial production growth and increasing export value by 30 percent over the same period last year. In the meantime, the monetary policy has proved effective and successful in controlling the free foreign currency market to stabilize the VND and USD exchange rates. In addition, interest rates have continued to follow a downward trend to provide impetus for businesses and investors. Other bright spots for economic growth include low credit growth and budget overspending which has dropped to below 5 percent of GDP. Despite the Government’s efforts to lower the economic growth rate from 7 to 6 percent, the rate of inflation is predicted to reach 17 percent this year, double its set target. The Head of the Statistics Department, Nguyen Duc Thang points out some outstanding problems arising from the high consumer price index (CPI) of 17-18 percent, natural disasters and a sharp increase in consumption power. Apart from the above-mentioned elements, how to control inflation successfully depends on cutting public investment spending and reducing investment capital for projects. In the past six months, VND80,550 billion was siphoned off from the State budget, accounting for 9 percent of total social investment capital for 2011. During the reviewed period, businesses were still subject to lending interest rates of 18 percent/year. If the rate of inflation…... [read more]

At a regular Government meeting in Hanoi on May 5, the Prime Minister called for a stricter control of prices, foreign exchange rates, deposit and lending interest rates as well as sources of revenues in order to reduce the budget deficit. He emphasised the need to speed up investments in key projects serving production and daily life. Attention should also be paid to enhancing administrative reforms, combating corruption and wastefulness as well as dealing with citizens’ complaints, he said. Regarding the socio-economic situation in April and in the first four months of the year, PM Dung highlighted positive efforts to increase industrial production and exports and reduce prices and lending and deposit interest rates. In the four-month period, the total investment capital from the State budget was estimated at over US$1.75 billion, equivalent to 26.7 percent of the yearly plan. The country’s total export turnover reached US$20.16 billion, representing a year-on-year rise of 8.9 percent. The consumer price index (CPI) in April saw the lowest increase of 0.14 percent from the beginning of the year. In the first four months, the country generated jobs for around 475,000 labourers, up 11.3 percent compared to the same period last year. Of the figure, 30,500 people were sent to work abroad, up 19.6 percent.... [read more]

PM Dung chaired a cabinet meeting in Hanoi on March 15 to receive how the Government’s resolution No. 11/NQ-CP on key measures to rein in inflation, stabilise the macroeconomy and ensure social welfare has been carried out since February 24, 2011. He said in the face of the complicated situation in the world in the first quarter of the year, all ministries, sectors and localities should make a greater effort to avert difficulties and challenges. The Government asked the Ministry of Industry and Trade to work with other ministries and localities to fully tap the country’s agricultural advantages, to drastically boost exports in the wake of the soaring prices of food and foodstuff in the world market so as to reduce the trade deficit. PM Dung required the ministries, sectors and localities to stringently control public investment, cease unnecessary expenditures, and exercise economical moves in the use of electricity. The ministries, sectors and localities need to continue managing prices on the market to prevent speculation and shortages of commodities, especially essential ones, according to the PM. They also need to focus on publicising information on the Government’s financial, monetary, and bank interest rate policies to help the people gain correct and thorough understanding of what the Government has done. Twenty days after resolution No. 11 was put into practice, the national economy has achieved positive results such as a 29.7 percent rise in export value (US$18.8 billion), which tripled the first quarter target set by the National Assembly. The monetary…... [read more]

>>Government keeps focus on inflation control After the Government’s regular meeting on July 1, Prime Minister Nguyen Tan Dung answered reporters’ questions about the results of socio-economic management in the first half of 2011 and targets and key tasks for the remainder of the year. Reporter: The Party and State have paid special attention to controlling inflation and stabilizing the macroeconomy. What is the Government’s evaluation of the situation in the first half of this year and what are the key tasks for the upcoming months? PM Dung: Inflation control and macroeconomic stabilization was a key task for 2011 and Vietnam has achieved positive results in the first half of this year. The consumer price index (CPI) has steadily slowed down (3.32 percent in April, 2.21 percent in May and 1.09 in June) and the foreign currency and gold markets have been stabilised with foreign exchange rates kept at an acceptable limit. Foreign currency reserves have improved and credit growth is under control. Exports rose by more than 30 percent while the trade deficit fell to 15.72 percent. Successful reduction of State budget spending, cutting public investment and strictly implementing monetary policies have resulted in a drop in the total social investment capital to 38.3 percent of the GDP compared to last year’s figure of 45.6 percent. State budget collection reached more than 55 percent of the estimates, up nearly 23 percent over the same period last year. Budget overspending in the first six months came to 23 percent of…... [read more]

PM urges cabinet members to persist with socio-economic targets Helping businesses access bank loans and deal with bad debts and large inventories were the major topics of the meeting which took place in Hanoi from July 2-3. Despite the difficult circumstances, the socio-economic situation saw some drastic changes in the first half of this year as inflation controls paid off, the macroeconomy remained relatively stable and 4.38 percent economic growth was maintained, thanks to some economic restructuring. Export turnover in the reviewed period was 22 percent higher than in the same period last year. Outstanding credit and industrial production showed signs of recovery and agricultural production saw a higher increase than last year. Cabinet members proposed measures to iron out snags in economic policies aimed at maintaining 5.2-5.7 percent economic growth this year while stabilizing the macroeconomy and keeping inflation under control. The consumer price index (CPI) in June rose by 2.52 percent compared to December last year and by 6.9 percent over June 2011. This is expected to serve as a foundation for keeping inflation this year at 7-8 percent, boosting economic growth and ensuring monetary policies to reduce the costs of bank loans in the remaining months of 2012. Apart from the satisfactory results recorded in the first six months, cabinet members pointed out difficulties and challenges in the socio-economic situation due to slower economic growth than during the same period last year and the ongoing difficulties businesses face gaining access to bank loans because of the continuing…... [read more]



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