SSI Research expects the SBV to further loosen credit growth room in the end of Q3

22-Jul-2021 Intellasia | Doanh nghiep va Tiep thi | 5:02 AM Print This Post

The analysis team of Saigon Securities Incorporation (SSI Research) has released a report on the capital market report for the week of July 12th to July 16th 2021.

In the week, the Open Market Operation did not record any new transaction, the State Bank of Vietnam (SBV) net withdrew 53 billion dong through the maturity of the seven-day buying forward. The foreign currency forward contracts continued to be implemented, helping the supply of on the interbank market be more abundant. The interbank interest rates slightly declined by three basis points, closing the week at 0.95 percent per annum on overnight term and 1.1 percent per annum on one-week term. The interbank interest rates are forecasted to remain low when the amount of dong from the sale of foreign currency forwards increases in the near future.

Notably, in the week, the SBV accepted the increase of credit growth limit in 2021 for a number of banks. In general, the credit growth limits were raised by two to six percent depending on the credit quality as well as the capital safety ratios of each bank. The credit growth of the entire system in 2021, according to the new credit growth limits, will be about 11%, higher than the nine percent set under the initial limits.

SSI expected the SBV to loosen the credit growth room one more time in the end of the third quarter or at the beginning of the fourth quarter this year.

The higher credit growth limits facilitate banks to lower lending interest rate level. Specifically, some banks such as Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), Military Commercial Joint Stock Bank (MBB), Asia Commercial Joint Stock Bank (ACB), HCM City Development Commercial Joint Stock Bank (HDB), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Tien Phong Commercial Joint Stock Bank (TPBank), and Viet Capital Commercial Joint Stock Bank (VietCapitalBank) have officially announced to cut lending interest rates by at least one percent per annum from July 15th to the end of the year, applicable to customers heavily affected by the epidemic. Meanwhile, savings interest rates remained unchanged and are expected to move sideways in the short term.

In the foreign exchange market, in general, the US dollar/dong exchange rate from early July until now has been in a stable trend because the supply and demand of foreign currencies were fairly balanced thanks to the positive remittances and FDI disbursement, which is enough to offset the trade deficit in the second quarter of 2021. The analysis team believed that the US dollar/dong exchange rate will level off in the short term and may slightly decrease towards the end of the year thanks to the improved balance of payments.

 

Category: Finance, Vietnam

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