Banks see improved business climate in 2015

Business performance at banks is expected to improve significantly during the second quarter, against the same period last year, a State Bank of Vietnam (SBV) survey said.
Business performance at banks is expected to improve significantlyduring the second quarter, against the same period last year, a StateBank of Vietnam (SBV) survey said.

The bank's business sentimentsurvey covered domestic and foreign banks in Vietnam and was released onApril 20. Banks also expect better results for the whole of 2015,according to the survey.

Previously, some wereconcerned about the application of a Circular 36 to capital adequacy andliquidity requirements for credit institutions, including the branchesof foreign banks in February 2015, which was expected to hurt banks'businesses.

The Circular 36 exhibited SBV's efforts to bringVietnam's regulatory framework closer to Basel II, strengthening thetransparency of institutions' operations, and promoting the developmentof and mitigating the risks in the local capital market.

"The latest survey showed banks making a positive assessment of thecentral bank's latest policy adjustment, including the new regulationson managing the banking system's safety," the central bank said in astatement.

Under the survey, banks forecast that thebanking system's average credit growth would increase to 16.93 percentthis year from 14.57 percent forecast in an earlier survey lastDecember.

The respondents also anticipated a slightdecrease in both deposit and lending interest rates. More than half ofthe banks expected interest rates to ease by 0.6 to 0.7 percent in thethree-month period ending June and slip by 0.87 to 1.1 percent for thewhole year.

Banks reported a rise in demand forloans since the beginning of March and they anticipated that demandwould increase sharply for the whole of 2015.

Deposits are also forecast to increase by nearly 15 percent from theprevious forecast of 14.35 percent, with capital mobilisation inVietnamese dong to grow faster than foreign currencies.

Most of the banks involved believe long-term deposits, particularlythose for six-month and longer terms, will increase in the secondquarter towards the end of the year.

Under the survey,most banks also expected their bad debt ratio to further decline andremain below 3 percent by the end of 2015 from 3.25 percent in December2014.-VNA

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