Experts: Banking sector to enjoy another strong year
Experts discuss investment opportunities in Vietnamese banking stocks at Fiinpro Talk 6 in HCM City on April 19. (Photo: Stoxplus)
Speaking at Fiinpro Talk 6 on “Vietnamese banking stocks: investment opportunities and risks,” Nguyen Anh Tu, Deputy Director General of the State Bank of Vietnam’s Monetary Policy Department, said banking stocks did well in 2017 thanks to a favourable economic environment with a positive outlook for growth, well-anchored inflation, improved management of banks, better supervision by the Government, and a decrease in non-performing loans.
With economic growth expected to be even better this year, it would be another good year for the banking sector, he said.
Banks are more likely to make a profit on the back of a strong economy since it stimulates demand for credit, and Vietnam is a bank-based economy with 92% of capital in the economy provided by banks according to the National Financial Supervision Council, he said.
Retail lending is increasing due to demand from newly-established small businesses and SMEs, which have traditionally found it difficult to get corporate loans from banks, and increasing consumption by inpiduals due to positive expectations from the economy and rising affluence, he said.
According to a report from the Boston Consultant group, the size of the middle- and upper-income classes in the country will reach 33 million by 2020, creating huge demand for financial and insurance services.
According to data compiled by StoxPlus from 18 banks, who account for 60% of the country’s loans, retail loans are growing at double the rate of corporate loans, and increased their share to 37% of total loans.
“Consumer finance has been growing rapidly and playing a part in the parent banks’ story,” Nguyen Quang Thuan, CEO of financial and business information provider StoxPlus, said.
He cited the example of FE Credit, the consumer finance arm of Vietnam Prosperity Joint Stock Commercial Bank (VP Bank), which accounts for the majority of its parent company’s loans and helps VP Bank improve its earnings.
Similarly, HDBank owns HD Saison, a growing consumer finance company.
Besides, lenders like Techcombank, Sacombank, VP Bank, SHB, and Military Bank have posted significant commission incomes from their partnerships with life insurers last year, he added.
Speaking about banking stocks, he said: “[They] still have some room to play.”
He said banks are buying back their bad debts from the VAMC to collect them while their income from lending would remain at around 3%.
Fees earned through partnerships with third party financial services providers would drive the earnings growth of banks, especially those with large customer bases, he added.
Related News
Ho Chi Minh City Customs proactively applies IT in customs supervision
18:09 | 21/04/2024 Customs
Ambitious profit goals of banks
10:32 | 13/04/2024 Finance
Banks seek to attract foreign capital
10:50 | 09/04/2024 Finance
Mechanisms for bolstering "bolder" and more efficient credit flow
08:24 | 31/03/2024 Import-Export
Latest News
Closely monitoring fluctuations to calculate the appropriate time to adjust prices
15:35 | 02/05/2024 Finance
Strictly monitor market fluctuations to appropriately adjust prices
14:46 | 27/04/2024 Finance
Closely monitoring market fluctuations to consider appropriate time to adjust prices
09:30 | 26/04/2024 Finance
How does the Land Development Fund work effectively?
09:19 | 26/04/2024 Finance
More News
Vietnam seeks to remove obstacles in upgrade of securities market
13:50 | 25/04/2024 Finance
Price stability from supply increase and transparency in trading in gold market
09:42 | 25/04/2024 Finance
SBV takes more actions to stabilise foreign exchange rates
13:43 | 24/04/2024 Finance
Proposal to exclude criminal liability for tax officials when businesses provide false information to refund VAT
10:35 | 24/04/2024 Finance
Corporate bond maturity in 2024 remains high: MoF
13:51 | 23/04/2024 Finance
Support clearance procedures for imported gold for bidding
09:33 | 23/04/2024 Finance
The exchange rate will gradually cool down from the end of the second quarter of 2024, while interest rates will remain low
09:32 | 23/04/2024 Finance
Majority of credit institutions forecast profit growth in 2024
15:16 | 22/04/2024 Finance
Central bank plans to auction gold bars on April 22
18:00 | 21/04/2024 Finance
Your care
Closely monitoring fluctuations to calculate the appropriate time to adjust prices
15:35 | 02/05/2024 Finance
Strictly monitor market fluctuations to appropriately adjust prices
14:46 | 27/04/2024 Finance
Closely monitoring market fluctuations to consider appropriate time to adjust prices
09:30 | 26/04/2024 Finance
How does the Land Development Fund work effectively?
09:19 | 26/04/2024 Finance
Vietnam seeks to remove obstacles in upgrade of securities market
13:50 | 25/04/2024 Finance