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Vietnam credit growth slows to 2.13% in 6-month period

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Credit demand in Vietnam is expected to stay low in the foreseeable future as the Covid-19 pandemic continues to be complicated globally, said a central banker.

Vietnam’s credit growth as of June 16 is estimated at 2.13% against the end of last year, significantly lower than the average growth rate of the corresponding period in 2019 at 5.7%, according to the State Bank of Vietnam (SBV).

 SBV’s Vice Govenor Nguyen Thi Hong expects credit growth to stay low due to Covid-19 impacts. Photo: SBV. 

Meanwhile, as of May 29, the growth rate of M2, which measures money supply that covers cash in circulation and all deposits, increased 3.4% against the end of 2019.

Regarding the credit structure, Nguyen Quoc Hung, director of the SBV’s Credit Department, said credit for agricultural production expanded 0.3% compared to end-2019; followed by that for exports (4.94%  versus 10% in the first six-month period of 2019); technology sector(2.92%); supporting industries (2.27%); and small and medium enterprises (-0.7%).

Hung added in the first month of the Covid-19 outbreak, nearly VND300 trillion (US$12.87 billion) in outstanding loans was affected by the pandemic, VND900 trillion (US$38.6 billion) in the next month and VND1-2,000 trillion (US$42.89 – 85.78 billion) in subsequent periods, causing a major impacts on banks’ operation.

SBV Vice Governor Nguyen Thi Hong said the banking system has been quick in providing support for customers, mainly in forms of debt restructuring or freezing and waiving debt payment.

As the Covid-19 pandemic remains complicated globally, Vietnamese enterprises would endure its impacts and thus demand for loans is set to stay weak in a foreseeable future, Hong added.

While the banks’ liquidity remain sufficient to meet customer demands, it does not mean lenders would relax its criteria for lending to result in higher credit growth, Hong stated.

To date, the SBV has slashed its policy rates twice by a combined of 100 – 150 basis points to support the country’s economic recovery.

Accordingly, the refinancing interest rate now stands at 4.5% per annum, rediscount rate at 3%, overnight interest rate at 5.5% and interest rate via open market operations (OMO) at 3%. 

The SBV also lowered the interest rate cap to 4.25% annually for deposits with maturities of one month to less than six months.

On May 7, the SBV  issued guidance for Vietnam Bank of Social Policies to provide loans at 0% interest rates with worth a total of VND16 trillion (US$686.42 million) for customers directly affected by the pandemic and businesses in paying salaries and wages for furloughed staffs.

Mobile payment surges

In spite of severe economic impacts of the Covid-19, the rate of cashless payments has been growing strongly in the first few months of 2020 compared to that of last year, Hong said.

In the first four months of 2020, domestic transactions via bank cards rose 26.2% in the number of transactions and 15.7% in value year-on-year; internet transactions rose 3.2% in number of payments and 45.7% in value while mobile payment surged 189% in number of transactions and 166.1% in value.

According to Hong, the banking system also waived a number of payment service fees worth a total of VND1 trillion (US$42.88 million). Hanoitimes

Ngoc Thuy

Source: https://vietnamnet.vn/en/business/vietnam-credit-growth-slows-to-2-13-in-6-month-period-650002.html

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Vietnam Airlines receives multimillion-dollar bailout package as state investment

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State Capital Investment Corporation (SCIC), the investment arm of the Vietnamese government, is looking to funnel VND8 trillion (US$347 million) into the charter capital of the flagship air carrier Vietnam Airlines.

On Thursday, Nguyen Chi Thanh, CEO of SCIC, revealed that the state-owned company is working with Vietnam Airlines to settle the share prices for the airline’s incoming offerings.

As per the government’s Resolution 194 on the bailout for Vietnam Airlines in light of the COVID-19 crisis, the air carrier is allowed to offer more shares to existing shareholders to increase its charter capital. The government has assigned the SCIC to buy shares of Vietnam Airlines.

While Vietnam Airlines is devising the plan to increase its capital via share offering before submitting it for appraisal of the State Securities Committee, SCIC is working to set an offering price that matches the market evaluation, Thanh said.

According to the SCIC leader, in order to set a proper price, Vietnam Airlines must figure out its corporate value, which in turn requires a business plan for no less than five years.

However, the business has yet to provide a long-term business plan as its future are still kept in limbo, with the date for resumption of international flights – a significant baseline for the plan – is still largely uncertain.

“As the development of the pandemic on the world remains unpredictable, it is hard to establish a business plan for Vietnam Airlines. Without it, we can’t assess the value of the company. Only when Vietnam Airlines returns on international routes can its business operation recover,’ Thanh remarked.

On behalf of SCIC, Thanh suggested enlisting the help of a reliable international auditing firm to assess the corporate value of Vietnam Airlines.

Meanwhile, SCIC will continue working closely with the airline and report to the Committee for Management of State Capital at Enterprises as well as other relevant authorities to ensure the efficiency and lawfulness of the investment process.

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Source: https://tuoitrenews.vn/news/business/20210116/vietnam-airlines-receives-multimilliondollar-bailout-package-as-state-investment/58820.html

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Think tank forecasts 6.46 percent growth for Vietnam

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Think tank forecasts 6.46 percent growth for Vietnam

A container ship docks at Ben Nghe Port in Ho Chi Minh City. Photo by Shutterstock/Claudine Van Massenhove.


A government think tank has pegged economic growth at 6.46 percent this year thanks to the country’s success in containing the Covid-19 outbreak and maintaining stability.

Vietnam is one of the fastest recovering economies in Asia, the Central Institute for Economic Management (CIEM) said in a report.

In the best case scenario, credit growth would be 13 percent against 10.1 percent last year, it said.

But it also warned of risks that could hamper growth, like the unpredictable global economic situation as the pandemic situation remains severe in many countries and possible anti-dumping and countervailing investigations by the U.S. and other countries.

Several international organizations have forecast a strong recovery for Vietnam this year, with lender HSBC forecasting growth of 7.6 percent. The International Monetary Fund and Asian Development Bank have forecast 6.5 percent and 6.1 percent growth.

The government has set a target of 6.5 percent.

Source: https://e.vnexpress.net/news/business/economy/think-tank-forecasts-6-46-percent-growth-for-vietnam-4221938.html

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SCIC to invest VND8 trillion in Vietnam Airlines

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A Vietnam Airlines plane – PHOTO: ANH QUAN

HCMC – The Government’s investment arm, State Capital Investment Corporation (SCIC), plans to invest VND8 trillion in Vietnam Airlines, SCIC general director Nguyen Chi Thanh announced on January 14.

In accordance with the Government’s Resolution 194 on supporting Vietnam Airlines to overcome difficulties caused by the Covid-19 pandemic, the national flag carrier will issue shares to its existing stakeholders to raise its charter capital. SCIC would represent the Government, which owns 86% of the national flag carrier, to buy the shares.

Thanh said Vietnam Airlines is drawing up the share issuance plan, which will be submitted to the State Securities Commission of Vietnam for consideration, and working with SCIC to determine the issue price.

According to the SCIC leader, to determine the issue price, Vietnam Airlines and SCIC have to evaluate the carrier’s enterprise value, which is based on its business plan for the next at least five years.

“The Covid-19 pandemic is still developing complicatedly globally, making it hard to determine Vietnam Airlines’ business plan. We cannot evaluate the carrier’s enterprise value without the business plan,” Thanh said.

SCIC has selected a world-renowned audit firm to help evaluate the enterprise value of Vietnam Airlines. SCIC is also working with the airline, the Commission for the Management of State Capital at Enterprises and other relevant agencies to ensure effective, careful and lawful investment in Vietnam Airlines.

Source: https://english.thesaigontimes.vn/80183/scic-to-invest-vnd8-trillion-in-vietnam-airlines.html

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