The highlights in the banking sector in 2019
2019 witnessed low credit growth rate.
1/ Interest rate cut
The State Bank of Vietnam (SBV) on September 16 slashed the prime interest rate by 0.25 percent. Just two months later, it lowered the dong ceiling lending interest rate applied to some preferential sectors and lowered the dong ceiling deposit interest rate.
Also in 2019, SBV eased the open market (OMO) interest rate two times, slashed the bond interest rate three times.
2/ Forex reserves reached record high
Except the heavy fluctuation at the end of Q2, in general, the dong/dollar exchange rate went flat in 2019.
SBV announced the approximately 1.5 percent increase in the official exchange rate and slashed the dollar purchase price from VND23,200 to VND23,175 per dollar in late November.
The forex reserves reached $73-75 billion.
3/ The US put Vietnam onto the watchlist for currency manipulation. The watchlist, released in late May, comprised nine countries.
There were two reasons for Vietnam to be added to the watchlist – the surplus in trade and current account balance.
4/ 18 commercial banks met Basel II standards before schedule.
Basel II has three pillars: minimum capital, supervisory review process, and market discipline disclosure. Of the 18 banks, only one has fulfilled all the three pillars.
5/ The credit growth rate was 5-year lowest in 2019
SBV projected the 14 percent credit growth rate for 2019. However, securities companies predicted that the real growth rate is 13 percent only, the lowest level in the last five years.
The growth rates were 17.29 percent in 2015, 18.71 percent in 2016, 18.17 percent in 2017 and 13.89 percent in 2018.
6/ Big changes in deposits at State Treasury
Under the new regulation set by SBV, State Treasury’s checkable deposits must be left at the State Bank of Vietnam Exchange instead of commercial banks.
Meanwhile, commercial banks will have to attend bids to attract the State Treasury’s time deposits.
The State Treasury’s deposits have been at the four state-owned banks in recent years, which provide huge capital.
7/ The National Assembly did not change the capital increase mechanism for the four state-owned banks.
Agribank and Vietinbank continue having difficulties in increasing their capital. Meanwhile, BIDV has found a solution by selling shares to KEB Hana Bank from South Korea.
8/ Many banks plan to seek foreign capital
Some commercial banks, including VPBank, SHB, SeABank and TPBank, have plans to issue international bonds to mobilize $300 million – 1 billion.
The solution allows them to get long-term capital, while they can mostly mobilize short-term capital from domestic sources.
9/ Nine commercial banks have bought back the bad debts they had sold to the Vietnam Asset Management Company (VAMC)
10/ Moody’s lowered 15 banks’ credit outlook to negative.
The merger and acquisition market in banking industry in the first half of this year has received new signal when Korean bank became a major shareholders of BIDV in early November with a record M&A deal worth US$890 million.
Growing attractiveness of Vietnamese banks' shares is thanks to a positive revamp and strong outlook of the sector, particularly as Vietnam is accelerating global economic integration.