A customer makes a deposit at a Vietcombank's office. (Photo: VNA) According to the SBV survey on business trends of credit institutions in thesecond quarter of 2022 released late last week, many credit institutions saidthat though their business performances in Q1 grew, they did not meetexpectations due to the impact of the Tet (Lunar New Year) Holiday. They expectperformance to be better in Q2.
Under the latest survey, credit institutions revised their expectations forprofit growth in 2022 compared to the previous survey.
Accordingly, nearly 90 percent of credit institutions forecast a positivegrowth in pre-tax profit in 2022 compared to 2021, down 5 percentage pointsfrom the previous survey.
A further 6 percent of credit institutions forecast a decline in their profitsthis year, while 5 percent expect their profits to be unchanged.
Credit institutions estimated the bad debt in the banking system inched down inQ1, and they expect the indicator to continually decline in the upcomingquarters.
After estimating a 2.6 percent rise in capital mobilisation in Q1, creditinstitutions expect the banking industry to gain an average deposit growth of3.6 percent in Q2 and 11.4 percent for the whole year. Compared to the previoussurvey period, this year's expected deposit growth decreased by 0.7 percentagepoints.
Credit institutions estimated the credit of the banking system rose by 5.3 percentin Q1, much higher than the growth rate of 2.95 percent in the same period in2021.
They expect the indicator to increase by 4.8 percent in Q2 and reach 14.1 percentfor the whole year, unchanged from the previous survey.
Credit institutions said the banking system's liquidity in Q1 remained strongbut was not as abundant as in Q4 2021 due to the high capital demand forpayments during the Lunar New Year.
Credit institutions expect liquidity to improve in Q2 2022 and the whole year,compared to 2021.
Credit institutions forecast both deposit and lending interest rates wouldremain unchanged or inch up by only 0.03-0.06 percentage points in April-June,and 0.13-0.18 percentage points for the whole year. The increase will mainlycome from deposit interest rates.
Credit growth in Q1 2022 hits high level
Credit growth of credit institutions was quite positive at 5.04 percent at theend of the first quarter of this year, much higher than the 2.16 percent risein the same period last year, SBV Deputy Governor Dao Minh Tu said at theGovernment’s regular press conference in March.
According to Tu, the surge showed the economy has positive signs and the dailylife, production and business of people and firms have also returned to normalthanks to the Government's effective measures against the pandemic.
''The increase is very high compared to previous years. At the end of the year,we will consider to adjust the credit growth to ensure it meets targets ofmacro-monetary policies and inflation control," Tu said.
According to Tu, the credit growth target in 2022 that the SBV set at thebeginning of this year was 14 percent. However, the target can be adjusted upor down at the end of the year, depending on the actual situation.
Regarding bad debts, Tu reported after five years of implementing Resolution42/2017/QH14, the bad debt settlement of credit institutions has achievedpositive results. Accordingly, from August 15, 2017 to November 30, 2021, 380trillion VND of bad debt was recovered according to Resolution 42. On average,some 5.66 trillion VND of bad debt was handled each month during theapplication of Resolution 42, against about 2.14 trillion VND previously.
However, the outbreak of the COVID-19 pandemic has negatively affected thecredit quality of the credit institution system. Bad debts have been increasingsince 2020 and reached more than 2 percent by the end of November 2021. Manyhave warned bad debt will continue to rise again due to the pandemic’s impacts.
Meanwhile, Resolution 42 on piloting the bad debt settlement of creditinstitutions will expire this year. The SBV, therefore, has proposed tolegislate the policies specified in Resolution 42 into a new law to continuallyenable the banking industry to settle bad debts of credit institutions. Theissuance of a new law on bad debt handling will help credit institutionsmaintain and accelerate the handling of bad debts to avoid potential risks forthe economy according to Tu./.
VNA
