A majority of credit institutions are optimistic about their business performance in 2022, according to the latest survey by the State Bank of Vietnam (SBV).

The State Bank of Vietnam (SBV)’s expansion of credit growth quotas for commercial banks has created favourable conditions for lenders to boost lending as a way of supporting capital sources for individuals and firms to recover after the COVID-19 pandemic.

Many banks have increased their interest rates to attract more depositors after getting a credit growth quota expansion from the State Bank of Vietnam (SBV).

Standard Chartered has forecast a potential interest rate cut if the economic impact of Vietnam’s COVID-19 outbreak lasts beyond October.

Profits of the banking industry in the third quarter of 2021 would decrease by 19% compared to the previous quarter due to slowing credit growth and increasing provision expenses, Yuanta Securities Vietnam estimated.

Banks have been promoting the mobilisation of medium- and long-term capital through bond issuance to meet the State Bank of Vietnam (SBV)’s requirements on capital adequacy ratio (CAR).

An escalation in COVID-19 cases and deaths in July-August will undermine Vietnam’s previously strong recovery from the pandemic shock and may temporarily set back the positive rating momentum, said Fitch Ratings.

Banks will continue to tighten lending in risky sectors including securities, real estate, financial, and tourism business, seeing higher credit risks in the remaining months of this year, a survey carried out by the Monetary Forecasting and Statistics Department has said.

The State Bank of Vietnam (SBV) has flexibly operated monetary policy tools to maintain liquidity for the banking system, contributing to stabilising and recovering credit growth in the context of unpredictable impacts of the COVID-19 pandemic.

Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong has requested that credit growth be achieved in tandem with improving credit quality, with a focus on manufacturing and priority areas.