The project on restructuring credit institutions in the 2011-2015 period under Government decision No.254/QĐ-TTg issued on March 1, 2012 was completed successfully attaining significant results. After five years, the number of domestic commercial banks has reduced from 42 in 2011 to 34 in addition to five joint-venture banks and nine wholly foreign-owned banks.
The safety and stability of the credit institution system have been maintained and improved while weak commercial banks were managed, reduced and restructured.
Non-performing loans were resolved and curbed to less than 3% according to the Government order. By the end of 2015, the system of credit institutions reached a capital adequacy ratio of 13% and met requirements on solvency as well as the ratio of short-term funds used for medium and long-term loans. Lending interest rates decreased from 17.9% in 2011 to 9.08% in 2015.
Exchange rates and the foreign exchange market also maintained stability despite fluctuations in the world financial market in late 2016. Thanks to the State Bank's new method to manage exchange rates flexibly following the developments of domestic and overseas markets, the domestic demand and supply of foreign currencies were kept balanced along with sufficient liquidity.
The efforts of the whole banking system helped reduce the rate of non-performing loans from 17.2% of the total number of outstanding loans in September 2012 to 2.62% in September 2016.
According to the Banking Inspection and Supervision Agency, from 2013 to September 2016 the Vietnam Asset Management Company (VAMC) bought VND262 trillion (US$11.53 billion) of non-performing loans, equivalent to 42.8% of the total non-performing loans. It has recovered approximately VND35 trillion (US$1.54 billion), equivalent to 14% of the loans purchased.
Meanwhile, credit institutions have settled over VND313 trillion (US$13.77 billion), about 57.2% of the total non-performing loans.
The State Bank has submitted a project on restructuring credit institutions in the 2016-2020 period to the Government which will focus on implementing the project on banking restructuring and non-performing loans settlement in the 2011-2015 period in a more comprehensive manner. The restructuring project will also be submitted to the National Assembly to develop effective measures to resolve non-performing loans to free financial resources for economic development.
In addition, the inspection and supervision over commercial banks will be strengthened to promptly issue warnings and appropriate directions.
Outcomes achieved during the restructuring of credit institutions in the 2011-2015 period laid the foundation for the sustainable development of the banking system in the subsequent period. The positive results gained in the restructuring of the banking sector also helps to support business restructuring and finance and investment market restructuring, contributing to boosting economic growth and macroeconomic stability.
