Credit demand expected to rebound in Q4/2021

25-Sep-2021 Intellasia | Vietnam Finance | 7:05 AM Print This Post

The demand for credit is expected to increase strongly in the near future, similar to what happened in the fourth quarter (Q4) of 2020. Many commercial banks have been granted credit growth limit extension by the State Bank of Vietnam (SBV)

The SBV’s data showed that by the end of August 2021, the credit growth of the entire economy was 7.4 percent compared to the beginning of the year, with outstanding credit of over 680 trillion dong. There is an uptrend after the credit growth reached 6.66 percent in the end of July. Thus, compared to Jun/2021, the credit growth in July and August remained positive with respective rates of 0.69 percent and 1.13%.

In the recent report, Bao Viet Securities Company (BVSC) said that the August credit growth is very positive in the context when the economy is suffering from the Covid-19 pandemic, many businesses have to suspend production and business activities due to the social distancing order in many localities under Directive 16

BVSC emphasized that the credit growth in August is about 1.5 times higher than the rate in the same period of 2020 which was only 4.82%.

In the last months of the year, BVSC believed that the credit growth will recover strongly from October, in the case that localities step by step remove the social distancing orders and businesses resume production and business activities.

“In Q4/2020 alone, when production activities were normal and domestic tourism started to reopen, the outstanding credit increased from 6.08 percent (by the end of September) to 12 13 percent at the end of the year. Thus, when the epidemic is better controlled and the Covid-19 vaccination continues to be actively implemented, the credit demand will rise and it is likely that the SBV will assign more credit growth room to commercial banks in order to support businesses to restore their operations,” said BVSC.

In 2020, the SBV repeatedly increased the credit growth limits for some banks, in which the highest limit was up to 30 percent to stimulate the economy.

In the newly published banking industry update report, the Securities Company of Commercial Joint Stock Bank for Investment and Development of Vietnam (BSC) mentioned that many banks have been granted additional credit growth room. The two banks that have received the highest credit growth limits are Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Tien Phong Commercial Joint Stock Bank (TPBank) with respective limits of 17.1 percent and 17.4%. BSC said that these two banks are assigned the highest credit growth room thanks to their high Capital Adequacy Ratio (CAR) according to Basel II standards, a wide portfolio with not too much focus on risky areas, and commitments to interest rate support in the near future.

The credit growth room of many other banks have also been expanded, such as Maritime Commercial Joint Stock Bank (MSB, 16%), Military Commercial Joint Stock Bank (MB, 15%), Vietnam International Commercial Joint Stock Bank (VIB, 14.1%), Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank, 13.1%), Asia Commercial Joint Stock Bank (ACB, 13.1%), Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank, 12.5%), Vietnam Prosperity Commercial Joint Stock Bank (VPBank, 12.1%), Saigon Hanoi Commercial Joint Stock Bank (SHB, 10.5%), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank, 10.5%), Orient Commercial Joint Stock Bank (OCB, 10%), and Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank, 9.5%). Meanwhile, BIDV’s credit growth limit also increases to 9.5 percent from 7.5%, according to VDSC.

 

Category: Finance, Vietnam

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