Banking & Finance

Banks involved in handling poorly-performing credit institutions, reducing lending interest rates to support businesses and individuals, and controlling credit in potentially risky areas have all had their credit growth limits adjusted by the State Bank of Vietnam. According to the World Bank, Vietnam’s credit-to-GDP ratio is among the highest in the world; a warning to the country about the potential risk of macro instability.

The Ho Chi Minh City Statistics Office has released a report on the city’s socio-economic situation in August and the first eight months of 2022. August was the first month this year that the city’s CPI fell, by 0.31 per cent, though it rose compared to August last year and since last December. It fell mainly due to lower fuel prices.

The State Bank of Vietnam (SBV) set a credit growth target of 14 per cent for 2022 at the beginning of the year. SBV Deputy Governor Dao Minh Tu has said that as of the end of August, credit growth had reached 9.91 per cent; high compared to the same period last year. With more than 4 per cent remaining, the central bank will assign new targets to banks in the next few days.

Figures from the Ministry of Finance show that as of the end of August, the amount of tax extensions totaled VND52 trillion ($2.2 billion), or 38.5 per cent of the plan. The amount of tax exemptions and reductions, meanwhile, is unprecedented, at nearly VND48 trillion ($2.03 billion).

At the end of the session on September 6, the interbank interest rate for VND loans was 5.44 per cent per annum for an overnight term, only slightly lower than the last peak of 5.56 per cent per annum in February 2016. Liquidity in the system is still tight and interbank interest rates continue to increase despite the State Bank of Vietnam’s intervention.

The BIDV Securities Company (BSC) has forecast two scenarios for Vietnam’s stock market in September. Under the first, the VN-Index will balance out at 1,270-1,280 points, moving towards 1,300-1,320 points as liquidity improves and positive sentiment spreads through the market. The Ho Chi Minh Stock Exchange (HoSE) allowing the trading of odd lots from September 2 will also have a positive effect on the market. The second scenario will happen if developed economies show signs of recession and negative sentiment appears, with the VN-Index forecast at around 1,240-1,250 points.