Banking & Finance

Covid-19 has had an impact on bank loans, with a number of regulations from the State Bank of Vietnam relating to debt structure no longer being appropriate. Banks have therefore made a number of proposals and recommendations to address the problems they face.

The Ministry of Finance (MoF) has proposed four solutions to support businesses and individuals during these tough times, including tax exemptions and reductions costing VND20 trillion ($874.66 million) and cuts to land rentals. Experts, however, believe this is not enough and that more is needed but that existing support should continue.

Vietnam’s stock market remains in the accumulation phase and there may be some corrections. The short-term trend is still positive, so short-term investors will be able to take advantage of these corrections to increase their holdings and buy new stocks.

The State Bank of Vietnam has issued a regulation stating that banks are allowed to buy bills and certificates of deposit (CODs) with a remaining term of less than 12 months in order to unify the transaction term between banks and the time limit for banks to discount with customers. Foreign bank branches will not be allowed to buy convertible bonds.

The total transaction value of government bonds in July was down by more than a quarter compared to June. The first auction to buy back government bonds, however, was successful.

Amid weak credit demand due to prolonged social distancing measures and abundant sources of VND from mature foreign currency contracts, interbank interest rates are forecast to decrease slightly. The balance of payments improved due to stable domestic foreign currency supply and demand and falls in exchange rates.