The government is managing decisively and effectively, creating additional room for banks and businesses to grow.

The decisive and effective management of the government and the Prime Minister, along with the efforts of businesses, has led to clear signs of improvement in the economy, thereby boosting credit demand. Banks and companies are being inspired to overcome challenges and strive to reach new heights.

Mr. Do Minh Phu, Chairman of the Board of Directors of Tiên Phong Commercial Joint Stock Bank (TPBank), speaks at the conference - Photo: VGP/Nhat Bac

This is the statement of Mr. Do Minh Phu, Chairman of the Board of Directors of Tiên Phong Commercial Joint Stock Bank (TPBank), at the Government Standing Committee conference with commercial banks about solutions contributing to the country’s socio-economic development, chaired by Prime Minister Pham Minh Chinh on the afternoon of September 21 in Hanoi.

Banks are given more room for credit growth

Due to several influencing factors, credit growth was slow in the early months of the year. However, in the past six months, especially until the end of the third quarter of 2024, credit has accelerated. The Chairman of TPBank identified three main reasons for the increase in credit growth.

Firstly, it is the decisive and effective management of the government and the Prime Minister, which has helped stabilize the economy and gradually show clear signs of recovery.

According to statistics, in the first eight months, Vietnam achieved a GDP growth rate of about 6.42%, with a trade surplus of around 19 billion USD, which significantly supports the increase in credit demand.

"This is an important, core, and decisive issue because if the economy does not recover, credit demand remains weak, and capital absorption is poor, banks will find it difficult to increase credit even if they want to lend, including at low interest rates," Mr. Đỗ Minh Phú said.

Secondly, the head of TPBank highly appreciates the role of the State Bank of Vietnam (SBV) in managing monetary policy recently. Looking back a few months ago, the exchange rate reached 25,700 VND, nearly 26,000 VND per USD, but has since cooled down significantly. The interbank interest rates have also decreased substantially, which helps banks maintain reasonable interest rates.

Thirdly, Mr. Phu believes that the new credit granting mechanism implemented by the SBV is quite suitable for this period. Banks are now allowed to calculate based on their ratings from the SBV.

Specifically, he cited the example of TPBank, which was rated A last year, receiving a score of 4.5. The SBV then allows banks to multiply this by 3.5%, determining their credit growth for 2024 proactively.

Furthermore, as of August 2024, over a month ago, the SBV continued to permit a new calculation method. Accordingly, banks achieving 80% credit growth receive an additional 0.5%. In the case of TPBank, rated A, it will receive an additional quota of about 2.5%. Therefore, TPBank’s total credit limit for 2024 will be approximately 18.5%.

In addition to policies from regulatory agencies, Mr. Đỗ Minh Phú emphasized the efforts of commercial banks that actively seek solutions to promote credit.

For TPBank, he mentioned the implementation of "3 reductions" solutions. First, reducing procedures by simplifying them. Second, reducing inappropriate internal processes and applying technology with big data to assess the creditworthiness of borrowing enterprises and quickly determine the value of collateral. Third, TPBank is actively reducing interest rates, lowering rates for 13,500 customers in the first nine months of the year.

In response to the government's initiative, TPBank proactively reduced interest rates by about 545 billion VND, along with a reduction of 200 billion VND in fees. Thus, in the first nine months, interest and fee reductions totaled over 700 billion VND.

Particularly, after the recent Yagi storm caused significant damage to customers, TPBank quickly issued a policy to reduce current interest rates by 50% for affected borrowers. Additionally, for new loans, TPBank will apply several attractive preferential interest rate programs.

Strengthening Borrower Responsibility and Ensuring a Fair Business Environment

In addition to the achievements, the Chairman of TPBank also candidly pointed out the challenges and made proposals to regulatory agencies.

One common difficulty facing banks today is debt recovery. Mr. Đỗ Minh Phú explained that the Resolution 42 from the National Assembly regarding the pilot handling of bad debts is no longer in effect. As a result, there are currently no legal documents to support quick and lawful debt recovery. This situation puts debt recovery personnel at risk of violating legal regulations and being subject to criminal prosecution.

The Government Standing Committee Works with Commercial Joint Stock Banks on Solutions for Socio-Economic Development - Photo: VGP/Nhật Bắc

Additionally, it is essential to resolve issues related to the handling of collateral and to address the lengthy legal procedures that complicate matters for banks.

Discussing solutions to alleviate challenges in the real estate market, Mr. Đỗ Minh Phú expressed that banks are eager for a resolution to be issued for the pilot implementation of commercial housing projects through agreements on land use rights for non-residential land. If this resolution is implemented soon, many commercial projects that do not currently have residential land but are suitable for planning and development initiatives could be approved as residential projects, thereby easing difficulties for numerous real estate companies.

The head of TPBank was particularly impressed by the government leaders' diligent oversight of the progress of projects, especially key projects that are currently underway.

"We are truly moved when witnessing the dedication of all the forces and participants involved in these projects, determined to bring them to completion. For example, the 500 kV line project from Quảng Trạch to Phố Nối, the renovation of Tân Sơn Nhất Airport, and the Long Thành Airport project. We can feel the spirit of 'Overcoming the sun, conquering the rain, and not yielding to storms,' and the attitude of 'Eating in haste, sleeping urgently, working three shifts, four teams...'

Witnessing these efforts, leaders of private commercial banks should inspire a sense of pride to ignite the flame of aspiration.

"Only in this way can we achieve the remarkable results seen in some projects recently. If we can ignite this desire, our country will surely soar into a new era. This is also our hope as representatives of private commercial banks," expressed the head of TPBank.