Illustrative image. (Photo: Vietnam Plus) Hanoi (VNA) – Based on optimism about the prospect of economic recovery, many banks are aiming to achieve growth of 20-30% this year, relying mainly on retail, personal and real estate lending.
Breakthrough from the beginning of the year
According to foreign financial institutions, Vietnam's economy got off to a strong start in 2022 thanks to the recovery of domestic consumption and favourable external conditions.
After falling nearly 4% in 2021, retail revenue picked up 1.3% year-on-year in January 2022 year-on-year, according to HSBC's newly released report. HSBC also noted that Vietnam's main growth driver is manufacturing, which has begun to see a strong recovery as the labour shortage situation continues to improve.
Experts from Standard Chartered Bank also believe that the Vietnamese economy will bounce back strongly in 2022, starting from the end of the first quarter. It is expected to obtain a growth rate of 6.7% this year and 7% in the following year and the medium-term outlook remains positive. Vietnam will continue to be an important link in the global supply chain and a destination chosen by many businesses. Investment activity in Vietnam is expected to recover this year too, after being affected by the COVID-19 pandemic.
Michele Wee, Chief Executive Officer at Standard Chartered Vietnam Ltd, said Vietnam’s economy is in the process of recovering.
Wee said that in a recent survey conducted by the bank, clients said that Vietnam has a lot of potential for growth and investment attraction, and is playing an increasingly important role in international trade and the global supply chain.
A recent report by Viet Dragon Securities Corporation (VDSC) is also optimistic that in 2022 economic recovery programmes will have a positive impact on the banking industry.
Support packages play an important role in ensuring business confidence, improving circulation and cash flow, and reducing credit losses, depending on the size, progress and effectiveness of the stimulus package and recovery momentum, the VDSC report said.
“When business conditions are improved, credit risks of the economy will be limited, thereby boosting the supply and demand for credit,” it said.
The assessment is feasible because, as of January 18, outstanding credit increased by 2.74% compared to the end of last year, much higher than the growth rate of 0.53% in January 2021. It is estimated that the amount of credit pumped out in January is about 286 trillion VND (12 trillion USD). This is the strongest monthly increase in recent years.
“The breakthrough in credit outstanding from the first days of the year shows that the resilience of businesses after the economy returns to a new normal state is quite positive,” a banking expert acknowledged.
Retail credit expectations
Economic recovery will open up many growth opportunities for banks, in which a breakthrough is expected in retail credit.
Officials of the Vietnam International Commercial Joint Stock Bank (VIB) said that the retail banking segment has grown 30 times in profit over the past five years. This year, the bank continued to set a high growth target in the retail segment. VIB also set a growth target of over 30% per year in terms of profit in the next five years.
Officials of Vietnam Prosperity Joint Stock Commercial Bank (VPBank) are also optimistic that by 2022, all strategic segments of this bank will enjoy growth, including consumer credit and small and medium enterprises.
In particular, the retail and real estate lending segments are increasingly valued by many banks.
Although there is no specific growth plan for 2022, VPBank leaders said that the bank has mapped out high and reasonable growth scenarios. The average growth rate for profit in the next five years can be up to 35%.
According to Vo Tri Thanh, a member of the National Financial and Monetary Policy Advisory Council, the State Bank of Vietnam's credit growth target of 14% is achievable in 2022, adding that it can obtain a higher result.
"This shows that the central bank continues to maintain flexibility in policy management which harmonise between the goal of controlling inflation, stabilising the macro economy, and supporting economic growth," he said./.
