Source capital for production and business recovery on a proactive basis

DNHN - Having ample credit capital on hand, combined with the banking industry's continuous execution of supporting policies, will provide additional push for firms to resume production activities and regain development momentum following the pandemic.

Credit is inextricably linked to economic recovery

Data from the State Bank of Vietnam (SBV) updated to the end of March 2022 shows that credit growth has reached 5.04% - according to the information of Standing Deputy Governor of the State Bank Dao Minh Tu announced at the meeting. The Government's monthly newspaper in March has just taken place. 

Deputy Governor Dao Minh Tu assessed this increase as very high compared to previous years. This shows that the economy is showing very positive signals. Along with the Government's drastic solutions to restore the economy, the above credit growth results are a positive sign in the recovery and development of enterprises.

The General Statistics Office also noted in the first quarter of 2022 report that, despite the economy facing numerous difficulties as a result of the Covid-19 epidemic's impact, the State Bank of Vietnam maintained a stable operating interest rate and a low-cost capital source to enable credit institutions to continue reducing lending interest rates and assisting the economy's recovery.  

In Ho Chi Minh City - the major economic center of the country, which has suffered the heavy consequences of the Covid-19 epidemic in 2021, also recorded very positive credit growth. In the first 3 months of 2022, credit in Ho Chi Minh City is estimated to increase by 3.65% and 13.1% over the same period in 2021, meeting capital needs for economic recovery.

Particularly, some sectors such as processing industry, manufacturing and tourism, hotel and restaurant have higher credit growth rate. Specifically, the group of processing and manufacturing industries increased by over 5%; accommodation and food services increased by 9.58%; transportation and warehousing increased by 9.06%; Mining increased by 6% compared to the end of 2021.

Nguyen Duc Lenh, Deputy Director of the State Bank of Vietnam branch in Ho Chi Minh City, said that from the beginning of the year until now, the State Bank of Vietnam has continued to support and remove difficulties for businesses after the epidemic is controlled through various mechanisms. in Circular 01/2020/TT-NHNN, Circular 03/2021/TT-NHNN and Circular 14/2021/TT-NHNN on debt restructuring, interest rate exemption and reduction and keeping the debt group unchanged.

Simultaneously, provide fresh low-interest loans to firms, cooperatives, and business households in the area in order to sustain, stabilize, and recover production and business development. To date, the total value of business support has reached 3.2 million billion VND, with over 1.85 million clients assisted. 

Thus, advantageous conditions are created for firms to minimize debt payback pressure, lower borrowing costs, etc., in order to preserve production and business stability, overcome obstacles, and re-establish growth.

In addition, Ho Chi Minh City's banking industry also continues to effectively implement national credit programs and those of the People's Committee of Ho Chi Minh City, creating conditions for priority areas for growth and ensuring social security. According to Ho Chi Minh City Bank for Social Policies, outstanding loans of policy credit programs reached nearly VND 7,200 billion, up 2.9% compared to the end of 2021. 

In which, outstanding loans for job settlement programs Employment accounts for the highest proportion (57.3%), making an important contribution to job creation and ensuring social security in the area.

Capital available for expansion

Additionally, the General Statistics Office's report contains critical indicators regarding the findings of a business trend survey of firms in the processing and manufacturing industries. In the second quarter of 2022, 50% of firms anticipate a better trend than in the first quarter; 32.3 percent anticipate steady production and business conditions; and 17.7 percent anticipate more problems. 

In which, the foreign-invested business sector is the most optimistic with 84.7% of enterprises forecasting the production and business situation in the second quarter to be better and stable compared to the first quarter; this rate in the state-owned enterprises and non-state enterprises is 83.6% and 81.2%, respectively.

Notably, 46.6% of enterprises expect the number of orders to increase in the second quarter and over 37% of enterprises expect to have stable orders. Regarding export orders, over 40% of enterprises expect to increase new export orders and over 45% of enterprises expect to be stable.

To meet the capital needs of businesses to support the economic recovery, in 2022, the credit growth of the entire banking industry is oriented at 14% by the SBV and adjusted in accordance with the actual situation. Accordingly, many banks have also planned to provide hundreds of trillions of dong in credit to the economy. 

Specifically, in the report on the 2022 plan targets expected to be submitted to the 2022 Annual General Meeting of Shareholders of MSB, the bank expects the credit balance in 2022 to be at VND 130,752 billion, equivalent to a level 25% growth compared to 2021.

At Sacombank, the credit growth plan in 2022 is set at 12%, corresponding to a credit balance of VND 435,000 billion. Based on the allowable credit growth limit of the State Bank and the business situation in 2022, Sacombank will adjust its deposit and loan growth targets accordingly.

VIB even set a plan to increase credit up to 30%, equivalent to a loan balance of VND 265,600 billion. According to the bank's management, there is currently no separate credit target for each bank, but the 30% target set by VIB is based on the bank's development capacity, actual risk management ability to still safe. In fact, in 2019, VIB was granted a credit line of up to 34% and is still fulfilling.

The ACB Board of Directors also determined that, while banking activities will be more difficult in 2022, there will still be chances as the global economy continues to recover and the local economy has bottomed out and will accelerate its recovery.

ACB forecasts that credit demand will increase, especially from the second quarter of 2022, thus requiring a longer-term preparation of capital. Accordingly, ACB sets a credit growth target of 10% in 2022, corresponding to a credit size of VND 398,299 billion and will be adjusted higher upon approval of the State Bank.

Similarly, many other banks also set high credit growth targets in 2022 such as HDBank increasing by 20% (VND 256,060 billion), OCB increasing by 25% (VND 129.493 billion), Eximbank increasing by 10% (VND 127,149 billion). 

Dao Trang