Banking sector suffers from difficulties

VCN – It is forecasted that the Banking sector will continue to suffer from difficulties in 2023 due to tensions in the corporate bond market, real estate as well as the liquidity of banks.
Finance-banking sector fulfills 2022 goals: minister Finance-banking sector fulfills 2022 goals: minister
PM asks banking sector to ensure legitimate interests of people, businesses PM asks banking sector to ensure legitimate interests of people, businesses
Asset quality at banks is deteriorating Asset quality at banks is deteriorating
Banking sector suffers from difficulties

The digital transformation will help banks solve many difficulties in 2023. Photo: H.Dieu

Suffering from difficulties

Experts from VNDirect Securities Company said that the tensions in the corporate bond and real estate markets would negatively affect the quality and liquidity of banks. Accordingly, about VND46 trillion of corporate bonds will be matured in the first six months of 2023, which will be a big challenge for the financial system. Moreover, corporate bond banks will be negatively affected as credit risk increases, and income from fees falls.

According to experts' analysis, although there are no official regulations or documents related to the tightening of credit flows into the real estate market by the State Bank of Vietnam (SBV), real estate lending has been slowed down to restrain the hot growth of this market since 2022.

In addition, real estate has a high-interest rate of 200% compared to other fields, so banks have limited lending to this sector to ensure the safety of capital and the quality of their assets.

Similarly, in the newly released strategy report, Viet Rong Securities Company (VDSC) said that the banking sector would continue to overcome difficulties in the downtrend of the real estate cycle and the less positive prospect of export and import. Accordingly, the interest income of the banking sector will slow down due to the impact of credit growth along with a decrease in the Net interest margin (NIM) in 2023. As a result, credit growth is expected from 11-12%, lower than the target of 15.5-16% in 2022.

Moreover, it is forecasted that the SBV will continue to tighten monetary policy in 2023, and the banking sector will face increased capital costs. In addition, asset quality will be an issue the year, especially as businesses will continue to face difficulties and high-interest costs due to the appreciation of the USD and rising interest rates, affecting the debt repayment capacity of enterprises. This may lead to an increase in provision costs in 2023-2024.

Seeking opportunities in difficulties

Mr Nguyen Quoc Hung, General Secretary of the Vietnam Banks Association (VNBA), said that a proposal was made to the SBV to consider allocating targets and credit room from the beginning of the year for banks to develop business plans through the annual general meeting of shareholders in April.

The SBV will consider the specific credit room. However, the VNBA's General Secretary said that banks with a healthy credit structure restructured weak banks, good asset quality, high capital adequacy ratio and good risk management may be granted a higher credit limit.

Similarly, Dr Nguyen Tri Hieu, a finance-banking expert, said that the credit growth and the plan of the banking system should be announced soon. This not only helps commercial banks have an operation plan, but even production and business enterprises may implement production and business activities when capital is guaranteed.

Banks should seek solutions to face the rising cost of capital. According to experts, banks with a high proportion of retail loans and Current Account Savings Account (CASA) may resist shrinking NIM.

Currently, Vietnam Technological and Commercial Joint Stock Bank (Techcombank), Military Commercial Joint Stock Bank (MB) and Bank for Foreign Trade of Vietnam (Vietcombank) are the banks with the best CASA ratio in the system.

According to banks, increasing capital is an urgent need to help banks manage risks and capital more effectively because the capital buffer of the Vietnamese banking sector is still lower than international standards.

According to Mr Pham Duc An, Chairman of the Board of Directors of the Bank for Agriculture and Rural Development (Agribank), the provision of charter capital for Agribank is very urgent for the bank to ensure the minimum capital adequacy ratio for credit growth from the beginning of 2023, serving the capital needs of the economy.

Vietcombank's leaders prioritise increasing charter capital for state-owned commercial banks in the context that the scale of charter capital and capital adequacy ratios of banks are still low compared to development needs and international standards.

On the other hand, with the support from the macro-economy, experts say that the banking sector will find "opportunities in difficulties". According to VNDirect experts, the banking sector's business results will be more stable in the second half of 2023 when interest rate and exchange rate pressures ease, and liquidity is improved thanks to the promotion of the State's public investment packages.

Some experts also said that the impact on banks is different, depending on the size and response level of each bank, in which those with good reserve buffers, effective digital transformation will have more advantages.

By HuongDiu/Ngoc Loan

Related News

Several real estate businesses were forced to pay taxes

Several real estate businesses were forced to pay taxes

VCN - Many real estate businesses with tens of billions of VND in tax debt have been forced by the Customs authority to stop customs procedures at the request of the Tax authority.
The situation of "one product, two management agencies" is still existing

The situation of "one product, two management agencies" is still existing

VCN - Current regulations are unclear, "one product - two management agencies", leading to the management implementation process that causes many difficulties for businesses.
Listen to entrepreneurs tell stories about overcoming difficulties in 2023

Listen to entrepreneurs tell stories about overcoming difficulties in 2023

VCN - Listen to real stories from Vietnamese businesses in many different industries to see the creativity and bravery of entrepreneurs in facing difficulties in steering the business ship overcomes the storms of 2023.
Demand for real estate in industrial park is growing positively

Demand for real estate in industrial park is growing positively

VCN - The industrial real estate market received a lot of good news in both supply and demand. The market is supplemented with new supply from a number of newly started and launched projects, along with demand and rental prices being stable or slightly increasing.

Latest News

Vietnam acts to combat money laundering, terrorist financing

Vietnam acts to combat money laundering, terrorist financing

Deputy Prime Minister Le Minh Khai on February 23 signed a decision promulgating the national action plan to implement the Government's commitment to prevent and combat money laundering, terrorist financing, and financing of the proliferation of weapons of mass destruction.
Banks ask central bank to extend June 30 payment deadline

Banks ask central bank to extend June 30 payment deadline

Industry experts said the current challenging economic situation and difficulties faced by businesses severely affect their ability to meet debt obligations. As there are no shortcuts to resolving old bad debts, a significant number of newly classified bad debts, which should be expected on June 30 this year, will put tremendous pressure on the country’s financial sector, as well as businesses.
Efforts to remove obstacles to upgrade the stock market

Efforts to remove obstacles to upgrade the stock market

VCN - According to the sharing of Ms. Vu Thi Chan Phuong, Chairwoman of the State Securities Commission (SSC), in addition to completing the main criteria of international rating organizations in upgrading the stock market (TTCK), the State Securities Commission (SSC) continues to improve domestic regulations on the basis of researching international regulations and practices to promote Vietnam's stock market to develop in a sustainable direction, creating a favorable environment to attract international investors and foreign indirect investment capital flows.
The State Treasury implements nine key tasks in 2024

The State Treasury implements nine key tasks in 2024

VCN - The deployment of key tasks plan in 2024 (refer to the Plan) of State Treasury was issued to focus resources on completing tasks during the year and following the proposed strategies.

More News

SBV injects large amount of money to support capital for banks

SBV injects large amount of money to support capital for banks

The State Bank of Vietnam (SBV) on February 20 net injected more than 5 trillion VND (nearly 204 million USD) into the banking system through the open market operation (OMO) channel to support capital for commercial banks.
Vietnam Stock Exchange’s revenue down nearly 44% in 2023

Vietnam Stock Exchange’s revenue down nearly 44% in 2023

The Vietnam Stock Exchange (VNX) reported revenue of over 1.92 trillion VND (78.26 million USD) in 2023, down nearly 44% compared to the previous year.
Focusing on five tasks so that the securities industry continues to develop in the face of intertwined opportunities, challenges

Focusing on five tasks so that the securities industry continues to develop in the face of intertwined opportunities, challenges

VCN - Deputy Minister of Finance Nguyen Duc Chi raised five tasks that need to be focused in 2024 so that the securities industry continues to develop in the face of intertwined opportunities and challenges.
Prioritizing the allocation of public investment capital

Prioritizing the allocation of public investment capital

VCN - Public investment in 2024 continues to set a disbursement target of at least 95% of the total of more than VND657,000 billion of assigned public investment capital. Thus the task is to focus on allocating capital quickly and reasonably right from the beginning of the year.
6,144 retail petroleum stores issue invoices after each sale

6,144 retail petroleum stores issue invoices after each sale

VCN - According to the latest statistics of the General Department of Taxation, as of February 1, 2024, the country has 6,144 retail petroleum stores issuing electronic invoices after each sale.
PM Chính instructs action for stock market upgrade

PM Chính instructs action for stock market upgrade

Efforts have been made to attract investment and promote the image of the Vietnamese stock market, with the goal of upgrading it from frontier to emerging status.
Cai Mep – Thi Vai port gets very busy right from the beginning of Tet

Cai Mep – Thi Vai port gets very busy right from the beginning of Tet

VCN - Many mother vessels made landfall at Cai Mep – Thi Vai port (Ba Ria – Vung Tau province) in the early days of Dragon Year 2024 showing positive signs about the recovery of seaport activities.
Public offerings key to promoting corporate bond market: experts

Public offerings key to promoting corporate bond market: experts

To promote the professional corporate bond market, one solution is to focus on widespread public offerings of corporate bonds rather than private placements, said experts.
New policy may have adverse impacts on bancassurance

New policy may have adverse impacts on bancassurance

A new regulation on banning commercial banks from selling insurance together with banking services will negatively affect banks’ bancassurance revenue in the future, some analysts have claimed.
Read More

Your care

Latest Most read
Vietnam acts to combat money laundering, terrorist financing

Vietnam acts to combat money laundering, terrorist financing

Deputy Prime Minister Le Minh Khai on February 23 signed a decision promulgating the national action plan to implement the Government's commitment to prevent and combat money laundering, terrorist financing, and financing of the proliferation of weapons of mass destruction.
Banks ask central bank to extend June 30 payment deadline

Banks ask central bank to extend June 30 payment deadline

Industry experts said the current challenging economic situation and difficulties faced by businesses severely affect their ability to meet debt obligations. As there are no shortcuts to resolving old bad debts, a significant number of newly classified bad debts, which should be expected on June 30 this year, will put tremendous pressure on the country’s financial sector, as well as businesses.
Efforts to remove obstacles to upgrade the stock market

Efforts to remove obstacles to upgrade the stock market

VCN - According to the sharing of Ms. Vu Thi Chan Phuong, Chairwoman of the State Securities Commission (SSC), in addition to completing the main criteria of international rating organizations in upgrading the stock market (TTCK), the State Securities Com
The State Treasury implements nine key tasks in 2024

The State Treasury implements nine key tasks in 2024

The deployment of key tasks plan in 2024 (refer to the Plan) of State Treasury was issued to focus resources on completing tasks during the year and following the proposed strategies.
SBV injects large amount of money to support capital for banks

SBV injects large amount of money to support capital for banks

The State Bank of Vietnam (SBV) on February 20 net injected more than 5 trillion VND (nearly 204 million USD) into the banking system through the open market operation (OMO) channel to support capital for commercial banks.
Mobile Version