Positive credit growth, interest rates may decrease

Many banks have reducedinterest rates to support small and medium enterprises. Photo: Internet

Positive growth

According to the estimates of VnDirect Securities Company, the credit growth of many banks is quite positive. By the end of first quarter, ACB's credit growth could reach 3.5%, much higher than the 2.3% increase in the same period of 2020. At VPBank, credit growth may increase by 3.9% in the first quarter of the year, up1.3 percentage points over the same period.

Credit growth in the first quarter of State-owned commercial banks is also forecast to be much better than the previous year. As at BIDV and VietinBank, in the first quarter,credit growth is expected to be 2.7% and 2.6%, respectively,while inthe same period last year, the credit growth of both banks were negative, at -1% and -1.2% respectively.

In areport on banking sector growth in the first quarter of 2021, SSI Securities Company estimated the credit growth of the banking group will increase 15%. The two banks with the best credit growth in the first two months of the year are MBand VIB. For all of 2021, SSI believes pre-tax profit is expected to achieve an impressive growth of 24% compared to 2020, driven by credit growth of 15%, credit costs decreased by 0. 22%.

According to information found at the Annual General Meeting of Shareholders, Nguyen Hoang Linh, General Director of MSB said total net revenue by the end of first quarter is expected to reach VND 1,200 billion with net interest income accounting for 58%. It is expected customer deposits by the end of March will be VND 92,000 billions, credit balance will increase by more than9%. Thanks to that, MSB's profit is estimated at 1,200 billion dongin the first quarter, while the profit in the same period is only nearly 290 billion dong. According to BIDV leaders, in the first two months of 2020, total assets jumpedby 2.1%, credit decreased by 0.87% and mobilized capital decreased by 2.5% due to cyclical calculation of the first months of the year and the impacted by Covid-19.

Scenario for growth

In fact, credit growth in 2020 had a strong differentiation between different groups of banks. While some banks with high growth of more than20% such as Techcombank increased 23.3%, there are also banks with less than 10%: VietBank increased by 9.5%, PGBank increased by 8.3% and Saigonbank increased by 6.1.%. Therefore, banks expect the regulator will be more flexible in assigning credit growth targets to each bank.

In 2021, the State Bank of Vietnam (SBV) has set acredit growth of about 12%. However, the State Bank said this target is not a fixed number,credit growth target will be adjustedif it is necessary, up to 14-15% depending on conditions. Responding to the press, Nguyen Tuan Anh, Director of the Credit Department for Economic Sectors, SBV said due to the complexCovid-19 situation, the State Bank built three credit scenarios.

In thefirst scenario, if the Covid-19 pandemic in Vietnam stops in the first quarter and there is mass vaccination, the credit growth is 12-13% andthe maximum can be 14%. The second scenario is the case of Covid-19 lasts until June andVietnam has to implement social distancing and iswaiting for vaccination, so credit may increase by 10-12%. The third scenario is the pandemic lasts until the end of the year andcredit increases 7-8%.

Thw State Bank is temporarily assigning the credit growth limit of the first quarter of the year for banks to implement, while theagency has finished calculating the target for the whole year. But with the above scenario, if the market is favourable, the level of credit growth is still quite high. Although banks expect credit to be better than in 2020 thanks to many factors such as economic growth recovery andenterprises’ return to business. Banks will continue to lower lending interest rates, because this is an important solution to stimulate demand for corporate loans.

According to experts, for credit growth to comply with the goals and support the economy, the key lies in banks stimulating demand for loans, increasing capital support for businesses. Therefore, it is advisable for banks to loosen lending standards for their preferred customer groups and SME customers in difficult circumstances.