The banking industry's credit is projected to have expanded 11% for the year by the end of December, Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu revealed at a press conference on December 24.

SBV Deputy Governor Dao Minh Tu speaks at the press conference.

As of December 21, the credit growth stood at 10.14%, Tu said.

The SBV managed growth this year in accordance with the absorption level of the economy and with a focus on production - business, consumption, and prioritised sectors under the Government's guidelines. As such, it made a significant contribution to the country’s post-pandemic economic recovery.

Credit institutions have implemented several loan programmes with preferential interest rates. Due to weakened credit demand resulting from the negative impact of COVID-19, credit expanded less than in the previous years.

To date, these institutions have restructured the repayment terms for about 200,000 customers affected by the pandemic, with the value of outstanding loans moving close to VND355 trillion (US$15.35 billion). Interest rate exemptions and reductions were applied for nearly 590,000 customers, with outstanding loans exceeding VND1 quadrillion.

The total fees that banks cut or reduced for customers are projected to amount to more than VND1 trillion by the end of this year.

The SBV has so far adjusted annual interest rates three times, for a total of 1.5-2%. The lending rate as of the end of November was brought down by 1% per annum on average compared to the end of 2019.

Director of the SBV’s Payment Department Pham Tien Dung said cashless payments have surged.

By the end of October 2020, the number of payment transactions via mobile phones surpassed 918.8 million worth 9.6 quadrillion in total, increasing 123.9% in volume and 125.4% in value from the same period last year. Nearly 374 million transactions worth more than VND22.2 quadrillion were done through the Internet, up 8.3% in volume and 25.5% in value year-on-year.

The bad debt ratio, meanwhile, exceeded 2%. The number was inevitable and reflected the great efforts made by the banking sector given the COVID-19-plagued economy and customers’ weakened ability to repay debts.  

At the press conference, the SBV released its plan for next year, which included continuing managing monetary policy to ensure a stable market and cutting costs to reduce lending interest rates. Credit will be extended, with lending capital focusing on prioritised sectors and production-business and tightened for risk-latent areas.