Topic: banks

Local banks meeting liquidity requirements and offering low interest rates for loans will enjoy an increase in their credit growth cap.

Banks acquiring struggling lenders will have the opportunity to increase their foreign ownership to 49 per cent under draft decree.

The State Bank of Vietnam (SBV) has reported that average growth in green credit in the 2017-2021 period was more than 25 per cent each year. As of June 30, outstanding loans for green projects stood at more than VND474 trillion ($19 billion), up 7.08 per cent year-on-year but accounting for only 4.1 per cent the total in the economy. At the “Green credit, green banking towards sustainable development in Vietnam” workshop held by the SBV in cooperation with relevant units on October 27, a central bank representative pointed out many obstacles in granting green credit, such as a lack of medium and long-term capital and high market risks.

In its 2023 plan, State Audit of Vietnam (SAV) will concentrate on assessing financial market restructuring, focusing on commercial banks and credit institutions. In the field of construction investment, SAV is expected to conduct 26 audits of investment projects, including key traffic projects such as the East North-South Expressway, Long Thanh International Airport, and coastal roads, among others.

The State Bank of Vietnam (SBV) has officially adjusted the credit limit for four banks - Vietcombank, HDBank, MB, and VPBank - in a bid to support weak credit institutions under government policy. An additional VND83.5 trillion ($3.49 billion) will be injected into the economy following the move. The credit growth limit at 18 banks has now reached 13.6 per cent.

State-owned commercial banks such as Vietcombank, VietinBank, and Agribank increased deposit interest rates by 0.8 to 1.3 per cent on September 27. This will likely push up all deposit rates.

Figures from 26 of Vietnam’s 27 listed banks reveal plans to grow after-tax profits by up to 33 per cent in 2022. However, analysts believe banks will have to manage plans smartly given that net income margins (NIM) are becoming smaller.

The CIR (Cost to Income Ratio) at ten of the 17 banks listed on the Ho Chi Minh Stock Exchange (HoSE) fell in the first half of 2022. Of note, the CIR of Eximbank, Sacombank, and LienVietPostBank fell 17 per cent, 9.9 per cent, and 9 per cent, respectively, compared to the first half of 2021. While LienVietPostBank’s CIR fell to 35.5 per cent, Eximbank and Sacombank’s fell sharply but were still above 40 per cent.

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.