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Vietnam banks to recover by 2021

The quality of bank assets has been affected by Covid-19, but the recovery of the banks will depend on their loan portfolios and asset structure.

Commercial banks have committed a series of preferential credit packages and cut lending interest rates to help businesses overcome Covid-19.




The State Bank of Vietnam (SBV) reported that the credit growth rate of the banking system in the first two months was 0.06 percent only, a sharp fall from the 1 percent growth rate of the same period last year. This was also the lowest growth rate in the last six years.

Meanwhile, GSO and MPI reported that as of March 20, credit provided to the economy had grown by 0.68 percent (it was 1.9 percent the same period last year).

Moody’s recently gave z ‘negative’ outlook to the regional banking systems, including Vietnam. It said economic and market disruptions would affect the banking system, leading to more bad debt and profit reduction.

Some Vietnamese banks once hoped that the epidemic would be contained by June, which means that the economy and the banking sector would have six more months to bounce back.

Meanwhile, Fitch’s has raised questions about asset quality of consumer loans which will be affected if people’s income decreases in Covid-19.

Prior to that, a report from JP Morgan released in early April predicted that the banking sector would recover soon, by 2021. Some Vietnamese banks once hoped that the epidemic would be contained by June, which means that the economy and the banking sector would have six more months to bounce back.

Banks have been affected by Covid-19, but the impact varies because banks have different loan portfolios and asset structure. Some banks focus on providing loans to businesses, while others focus on retail banking and services. The recovery of the banks would be different.

Techcombank is one of a few banks in the region that can make money on both sides of the balance sheet, which brings profits in long term.

For many years, Techcombank has been following its own path with a special portfolio. It provides funding in accordance with ecosystems (both businesses and individuals of the same chain, such as buying houses for accommodation) in six business fields (which make up 48 percent of GDP and have the growth rate of nearly 16 percent, nearly twice as much as GDP).

Thanks to this, Techcombank can satisfy long-term needs such as houses and cars, to daily needs such as shopping and tourism.

In general, Vietnam’s banks are still highly appreciated by foreign investors. Though their profits have decreased, the profit margin remains high among ASEAN countries. The potential for credit growth and the possibility of the foreign ownership ratio ceiling increase are the attractive points of the banks.

Chi Mai 


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