Banking & Finance

It has been forecast that the bad debt ratio in the banking system may increase in the near future as Covid-19 is still to be brought under control. While waiting for the Law on Handling Bad Debts of Credit Institutions to be developed, the State Bank of Vietnam (SBV) has proposed extending the application period in Resolution No. 42, on handling the bad debts of credit institutions, by three years, to August 15, 2025. Resolution No. 42 from the National Assembly is valid for five years from August 15, 2017.

The credit balance in February was down by VND96 trillion ($4.1 billion) while cash outflows seen before the Lunar New Year (Tet) returned, meaning less stress on liquidity in the banking system. This is most evident in the decline in interbank interest rates.

According to the General Department of Taxation, there are now more than 489,000 businesses using e-invoices, or 57.4 per cent of all businesses in operation. After the first phase is deployed in six cities and provinces, e-invoices will then be introduced from April in the remaining 57 cities and provinces in the second phase.

As of the end of February, the total number of securities accounts in Vietnam, including both domestic and foreign investors, stood at more than 4.7 million. According to analysts, individual investor accounts are increasing in number but not in quality.

According to Mr. Petri Deryng, Portfolio Manager at the PYN Elite fund, the response of Vietnam’s stock market to the Russia-Ukraine crisis has been only moderate, with 95 per cent of transaction value coming from individual domestic investors. If the conflict become worse and lasts longer, however, the market will see negative developments in the weeks to come.

According to Dragon Capital, oil prices may exceed $150 a barrel this year due to the crisis between Russia and Ukraine. Stock market investors therefore need to prepare for a worst-case scenario of inflation reaching 4.18 per cent in 2022, exceeding the target set by the government of less than 4 per cent.