On the evening of June 3, the Government Office held a regular Government press conference for May 2023 to inform about the socio-economic situation in May and the first 5 months of the year, along with a number of issues of public concern. The press conference was chaired by Minister, Head of the Government Office Tran Van Son, Government Spokesperson.

At the press conference, Deputy Governor of the State Bank of Vietnam (SBV) Pham Thanh Ha answered questions from the press regarding the fact that some banks have now used up all their credit room while some banks still have some.

According to Deputy Governor of the State Bank of Vietnam Pham Thanh Ha, the State Bank of Vietnam announced a credit growth target of about 14-15% at the beginning of this year and also allocated appropriately to each credit institution with a growth plan for the year. By the end of May, the economic credit in terms of data reached over 12.3 million billion VND, an increase of about 3.17% compared to the end of 2022.

According to Mr. Ha, going deeper into the banking groups, for state-owned commercial banks, accounting for about 44% of the credit market share, the growth rate is only about 35% compared to the level assigned by the State Bank. The group of joint-stock banks, accounting for about 44% of the market share, is currently at about half of the assigned level. "Thus, both groups account for about 91% of the credit market share, there is still a lot of room for growth for the rest of the year," Mr. Ha stated.

The Deputy Governor of the State Bank of Vietnam also said that looking back at this time in 2022, credit increased by approximately 8% compared to the end of 2021. Thus, under the condition that the State Bank's credit policy remains unchanged, the credit growth target for 2022 is 14%, this year it is slightly higher, from 14% to 15% but credit growth is low, clearly the economy's capital absorption capacity is weak, significantly weaker than last year.

According to Mr. Pham Thanh Ha, the State Bank analyzed that there are 3 main reasons: First, for manufacturing enterprises, product consumption is difficult due to lack of orders, leading to a decrease in demand for new loans for production.

Second, for small and medium enterprises, some enterprises have a weakened financial situation and do not have a feasible plan, leading to not meeting the bank's loan requirements.

Third, regarding real estate credit, many real estate projects are facing difficulties, including legal difficulties, and few new projects are being implemented, so the demand for real estate credit is also decreasing.

From the above causes, the Deputy Governor of the State Bank proposed solutions, specifically: For the banking sector, it is determined to continue directing credit institutions and banks to reduce lending interest rates.

"After many management moves by the State Bank from March to May, the interest rate level has also decreased. Recent data shows that the average lending rate for new loans is currently around 9.07%, down 0.9% compared to the end of last year. With data like this, we believe that the interest rate level is decreasing and will decrease in the near future," said Mr. Ha.

Regarding the existing debt balance, Mr. Pham Thanh Ha said that due to customers having difficulty in repaying their debts, the State Bank of Vietnam has issued Circular No. 02/2023/TT-NHNN allowing debt restructuring and maintaining the debt group. The State Bank of Vietnam will continue to direct organizations to implement this policy to support existing debt balances for businesses.

As for new outstanding loans, banks and credit institutions are required to continue actively lending to eligible customers. "Obviously, the banking system mobilizes capital to lend, so eligible customers will certainly have access to credit capital," Mr. Ha emphasized.

In addition to banking solutions, the Deputy Governor of the State Bank said that the State Bank sees that solutions to increase economic demand are very important. Therefore, ministries and sectors need to continue to promote policies to support businesses, develop small and medium enterprises, promote, search, develop, and remove difficulties in the consumer market and real estate market, thereby removing difficulties for businesses as well as improving financial capacity and improving access to credit.