Overall, the banking industry income was VND12.47 quadrillion , increasing only 4.56 percent from the end of 2022, far short of the 14-15 percent goal for the entire year.
In the context of economic troubles, many businesses, company divisions, and borrowers are anxious about the difficulty of penetrating funds. Two of the impediments that people are concerned about are procedures and excessive loan rates.
Following the Prime Minister's directive, the State Bank of Vietnam has consistently suggested that banks and credit institutions reduce interest rates on old and new loans by at least 1.5-2 percent. The "Big 4" joint-stock commercial banks, which include Vietcombank, BIDV, VietinBank, Agribank, and more than a dozen banks, recently reduced savings and loan interest rates in tandem. This is the fifth consecutive interest rate reduction since the beginning of the year. This has lowered lending interest rates by 0.5-3 percent, which is expected to encourage credit demand and boost agricultural output by the end of the year.
Against the backdrop of economic challenges, the country across all industries only accomplished an export turnover of US$194.73 billion in the first seven months of 2023, a 10.6 percent decrease from the identical time last year. Meanwhile, many agricultural exports are highly valued. Vegetable exports increased by 68.8 percent, reaching a turnover of $3.25 billion, surpassing the export value of vegetables in 2022 ($3.16 billion).
Rice exports surged in both output and price, resulting in a high turnover of 4.85 million tons, bringing in $2.62 billion, an increase of 19.1 percent in output and 31.4 percent in value over the same period last year.
By the end of 2023, the rice and fruit export industries' growth potential is still quite substantial in crunch time. The aquaculture industry is struggling; shipments fell in the early months of the year, although there are signs of recovery beginning in the fourth quarter of 2023. Enterprises require large amounts of funds for production, purchasing, increasing export, and domestic consumption, and preparing goods for tourism on National Day (September 2), the back-to-school season, and the Lunar New Year. This provides an incentive to raise credit demand.
Lowering bank lending rates is expected to create opportunities for large credit flows into investment, manufacturing, and export of goods. The key to unlocking this possibility, however, is in the disbursement procedures and the appropriate use of loans by businesses to avoid creating bad debts. Lowering interest rates is only one requirement for credit development. The bank need to adopt synchronized solutions for the economy's three growth drivers, namely investment, consumption, and import and export.
Accordingly, the disbursement progress of public investment funds, policies, and measures to stimulate consumption and export demand need to be vigorously implemented. Especially, agricultural products need to be prioritized. There is still room for growth of goods such as rice, vegetables, seafood, forest products, and wood furniture.
Besides, preferential credit programs lend VND40 trillion for businesses, cooperatives, and business households, VND120 trillion credit packages for social housing, worker housing, and renovating old apartments, and VND15 trillion for the field of forestry and fishery products, all of which require an immediate disbursement solution.
Prime Minister Pham Minh Chinh has recently commanded the State Bank of Vietnam to respond quickly and effectively in a progressive spirit, by listening and providing particular answers to problems; and by proactively deploying and developing bank-enterprise interaction operations through appropriate forms.
The banking industry has to simplify administrative procedures, prevent ambiguous regulations and differing interpretations, remove roadblocks and difficulties as soon as possible, and establish favorable conditions for enterprises to receive financing.
The Governor of the State Bank of Vietnam also asked credit institutions to minimize costs, cut procedures, and enhance their use of information technology and digital transformation. Credit stimulus conditions are consistently increasing credit growth and appropriate interest rates to unblock the dramatic flow of agricultural products from now to the end of 2023.
