Governor Le Minh Hung: In 2018, SBV net purchases $6b, to continue to purchase a large amount of foreign currency at the beginning of 2019

11-Jan-2019 Intellasia | Tri Thuc Tre | 6:00 AM Print This Post

Governor Le Minh Hung said that in two days, 7th and 8th January, the State Bank of Vietnam (SBV) has purchased a large amount of foreign currency. The on-balance sheet non-performing loan (NPL) ratio has returned to less than two percent, and if including off-balance sheet, potential debts, etc., the ratio is only 6.3 percent.

On the morning of 9th January 2019, SBV organised a conference to on banking tasks in 2019. The conference was attended by prime minister Nguyen Xuan Phuc, Public Security minister To Lam, Leader of SBV and leaders of credit institutions in the banking system.

Speaking at the opening of the conference, SBV Governor Le Minh Hung said that in 2018, SBV has coordinated and flexibly operated monetary policy instruments to stabilise the money and foreign exchange market, contributing to control inflation at below four percent. By the end of 2018, total payment means increased by 12.5 percent compared to 2017.

Interest rates remained stable in the context of increasing international market interest rates.

Exchange rate and the foreign currency market were operated smoothly, SBV continued to purchase a large amount of foreign currency to supplement foreign exchange reserves. Specifically, last year, SBV net purchased over six billion US dollar to increase foreign exchange reserves, particularly in the two days of 7th and 8th January, SBV continued to buy foreign currency in large quantities.

Credit growth was reasonable at 14 percent last year, much lower than in the previous years, and credit was strictly controlled with effort to strengthen and improve efficiency. Credit growth is low but contributed more to Gross Domestic Products (GDP) growth of the economy than in previous years. In addition, credit focused on priority sectors such as processing, manufacturing, and agriculture and increased the proportion of these sectors in the economy.

Regarding the restructuring of the banking system, SBV has so far approved all restructuring plans of credit institutions. Last year results also showed that the quality of credit institutions was improved.

Regarding bad debt handling, on-balance sheet NPL ratio by the end of 2018 fell sharply to 1.89 percent, much lower than previous years. NPLs including on-balance sheet debts, potential debts, debts sold to VAMC have decreased from more than 10 percent in 2016 to 6.3 percent at the end of 2018, meaning that NPL ratio has decreased significantly, the level of NPL has achieved important results.

In addition, non-cash payment activities are also strongly promoted.

In 2019 plan, according to the Governor, SBV will continue to manage the active, flexible, prudent monetary policy, harmoniously coordinate with other monetary and macroeconomic policies to control inflation at below four percent; maintain stable economic growth at a reasonable level, stabilise the money and foreign exchange market.

Some key measures such as operating open market operations to regulate liquidity of credit institutions at a reasonable level; operating required reserve tools together with other monetary policy instruments; rediscounting for credit institutions to support liquidity and lending under programmes approved by the government, supporting credit institutions to restructure and handle bad debts; operating interest rates, exchange rates at reasonable rates; credit management rationally accompanied with improving credit quality (credit growth at 14 percent and flexibly adjusted according to market conditions, with priority for banks implementing Basel II early; actively managing the gold and foreign currency markets effectively, consolidating foreign exchange reserves. The restructuring of credit institutions associated with bad debt handling will also be centralised by SBV this year.


Category: Finance, Vietnam

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