Local banks lower expectation for credit growth in 2021 on Covid-19
Over 85% of credit institutions and banks projected to be profitable in 2021.
Local banks predict credit growth to expand 4.7% in the third quarter and 13% for 2021, lower than their previous expectation of 14.7%, due to the serious nature and uncertainties of the Covid-19 pandemic.
|Customer at HD Bank in Hanoi. Photo: Viet Linh|
The State Bank of Vietnam released the data in its latest survey on the sentiment of banks and credit institutions for the third quarter of 2021, conducted from May 25 to June 10.
Banks, however, remain positive on their business result in the third quarter and in 2021 as people and businesses would continue to seek more loans in the coming time, but bad debt risk is rising as the pandemic continues to wreak havoc on the economy.
The capital mobilization rate is expected to stay unchanged from now on until late 2021, the banking sector could see a 5.5% increase in the amount of capital mobilized in the third quarter and 11.9% for the whole of 2021.
Due to the difficult economic environment, banks have also reduced their prospects for economic recovery, in which 56.8% expecting a slightly higher profit in the third quarter compared to the previous ones, 35.8% predicting unchanged and 7.7% expressing concern of a decline in profit.
Overall, 85.4% of credit institutions and banks projected to be profitable for 2021, 4.9% suggested unchanged earnings and 9.7% expected a decrease.
According to the SBV, the majority of banks said their business performance has improved in the second quarter, but the pace slowed down due to the pandemic.
Respondents pointed out to “financial situation of customers” and “SBV’s management of policy rates” as the two factors directly affecting their business results in 2021, while “competition from rivals” are their biggest concern.
The SBV calls for banks to continue prioritizing credit into priority fields such as agriculture, industry, small and medium enterprises, and tightening the capital flowing into risky sectors in real estate and securities.
As of May 31, the banking sector had restructured the debt payment schedule for over 257,600 customers with a total outstanding loan of VND336.66 trillion (US$14.6 billion); lowered and waive interest rates for 676,690 customers for VND1,270 trillion ($55.05 billion); provided loans with preferential rates of VND3,500 trillion ($151.73 billion).
- Vietnam's first debt trading platform to start operation on October 15
- Vietnam's credit growth expands by 7.42% despite Covid-19 impacts
- Nearly 115,000 new securities accounts opened in September
- Government bonds reverse Vietnam's dependence on foreign loans
- Gov't likely to kick start Mobile Money this month
- Vn-Index set to go sideways this week
- Vn-Index set to hover around 1,350-mark this week
- Banks foregone over $1 billion in profit to support businesses during Covid-19 outbreaks
- Vn-Index set to maintain positive trend to reach 1,380 this week
- Vietnam to prioritize 2022 expenditure budget for raising basic salaries
Vietnamese Gov’t lowers GDP growth forecast to 3.5% this year
Women filmmakers struggle to overcome gender prejudice
Vietnam, India traditional costumes show similarities
“Banana” millionaires along Hanoi’s Red River
Vietnamese army required to intensify peacekeeping missions
Vietnam GDP growth predicted to hit 1.8% in 2021: VESS
Hanoi exerts efforts to reopen the economy and adapt to a new normalcy
"Plastic-19 Lockdown" Challenge launched
US$30 million climate change adaptation project launched in Vietnam