VietNamNet Bridge - Listed companies’ production and business have resumed, but the predicted bank loan interest rate increases have caused big concerns.


Debt/stockholder equity ratio on the decrease

After falling sharply in 2011 and 2012, listed companies saw their assets increasing slightly since 2013. 

In 2015, due to difficulties, their revenue growth rate fell sharply to 6 percent from 15 percent in 2014.

The stockholder equity increased sharply (by 25 percent in 2015), which helped their total assets grow more rapidly (by 17 percent in 2015).

However, as the difficulties lasted for a long time, listed companies have to reduce the financial leverage ratios and see low profitability. Because of the asset growth promotion through the stockholder equity increase, the ROE (return on equity) still cannot regain the previous rate. 

Listed companies’ production and business have resumed, but the predicted bank loan interest rate increases have caused big concerns.

With the movement of businesses raising charter capital in 2014-2015, the average ROE slightly improved compared with thevlowest point in 2013, but it is still lower than that of years before.

The ROA (return on asset) is still on the slight increase from 5.3 percent in 2013 to 6.1 percent, which is higher than that in 2012. Meanwhile, the pre-tax profit margin rate and interest rate have been hovering around 11-12 percent.

This shows that the financial pressure has eased significantly compared with 2012. After the 2011-2012 period which businesses found tough because of the high loan costs, most businesses have reduced the use of financial leverage. The ratio of debt on stockholder equity dropped sharply from 1.43 in 2011 to 1.1 in 2015.

At the same time, as the loan interest rate has been decreasing thanks to the banking system’s liquidity improvement and the presence of watchdog agency’s interest rate packages, businesses’ capital costs have decreased significantly. 

The cost of the banking sector decreased to 5.5 percent from 8.5 percent in 2011, accounting for 16 percent of total costs (the figure was 25.6 percent in 2011).

Interest rate remains worry for businesses

However, though businesses’ health has recovered after the difficult 2011-2012 period, experts said the recovery was unstable. They warned that if the lending interest rates increase, the financial cost burden would return.

Experts have every reason to give that warning. The deposit interest rates are on the increase, which would lead to lending interest rate increase, possibility to occur right in the second quarter of 2016.

Most commercial banks raised their offered deposit interest rates by 0.1-0.2 percent per annum in late February.

A new deposit interest rate war was believed to kick off in late 2015 when a series of banks began raising interest rates. Sacombank, for example, raised the interest rates by 0.2-0.3 percent for some short-term deposits.


DNSG