Viet Nam News
HÀ NỘI – Credit growth expanded 6.53 per cent in the first five months of the year, contributing significantly to the growth of domestic production and business.
This was revealed by deputy governor of the State Bank of Việt Nam (SBV) Nguyễn Thị Hồng on Monday.
At a meeting in Hà Nội to announce the regulation results of the monetary policies and the banking operation to date, Hồng said that the credit growth was higher than the rates of 5 per cent and 4.5 per cent achieved in the same period in 2016 and 2015, respectively.
Lending in the period focussed on Government-oriented prioritised industries of agriculture, exports, supporting industries, small- and medium-sized enterprises (SMEs) and hi-tech businesses.
Hồng said that the credit growth in the first five months of 2017 in the real estate industry had slowed down, compared with the same period last year; however, she did not reveal the number.
Besides controlling the lending to real estate, the central bank also instructed credit institutions to closely supervise loans to build-transfer (BT) and build-operate-transfer (BOT) projects, she said.
Concerning the foreign exchange market, Hồng said that the market had become complicated since the end of 2016, owing to a series of new policies taken by the US President Donald Trump.
The SBV has regulated the reference rate flexibly, Hồng said, adding that the đồng has so far devalued by more than 1 per cent against the US dollar.
At the meeting, Hồng also said that as predicted by economists earlier this year, the reduction of interest rate was a challenge this year for SBV. She said that in the first months of the year, some banks increased interest rates for đồng deposit certificates and đồng deposits, mainly for terms of over 12 months. However, the central bank met with banks to require them keep the rate stable.
Credit growth forecast to raise
The central bank is likely to raise credit growth target by 1-2 per cent from the original 17-18 per cent for 2017, the Bảo Việt Securities Company (BVSC) said.
The SBV may do this to support growth, as the GDP was relatively low in the first quarter of 2017. Việt Nam posted a year-on-year GDP growth of 5.1 per cent in the first quarter of 2017 due to slowdown of agriculture, forestry and aquaculture, slower than the previous two years at 5.48 and 6.12 per cent, respectively.
The forecast has been made in the scenario that inflation in the remaining months of the year is expected to stay under control, the BVSC said, in a report titled “Inflation and its impact on monetary policy”, which was released recently.
The General Statistics Office has reported that Việt Nam’s month-on-month consumer price index dropped 0.53 per cent to a 10-year low in May because of the plummeting prices of many items, especially foodstuff, which brought down the year-on-year inflation index at the end of May to 3.19 per cent, down sharply from 4.3 per cent in April.
One of the biggest concerns for inflation this year is the impact of the revised rates of medical services. However, as of end May, the roadmap for increasing the prices of drugs and medical services under step 2 of Joint Circular No 37/2015/TTLT-BYT-BTC, issued by the health and finance ministries on October 2015, was completed.
As per BVSC’s statistics, this is likely to be the final adjustment in the rate of medical services, which was being revised as per the two-step roadmap since the beginning of 2016 till now. In the remaining seven months of 2017, healthcare products will not have a sudden impact on inflation, the report said.
The BVSC has adjusted the year-on-year inflation forecast for Q2 to 3 per cent, compared to 3.2 per cent at the end of Q3 and 3.5 percent at the end of Q4.
However, BVSC recommended that increasing credit growth should be done with caution. The whole system is just recovering, and many banks are still burdened with bad debts. So any impetus in growth resulting in a decline in asset quality must be closely monitored by the central bank, it said. — VNS