31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Banking & Finance
Vietnam credit growth set to return to pre-Covid-19 level in 2021
Hai Yen 17:16, 2021/01/07
The State Bank of Vietnam (SBV), the country’s central bank, could promote a reduction in financing costs and lower borrowing costs to help ease hardship for businesses.

Vietnam’s credit growth is set to hit 13-14% in 2021, higher than the estimated rate of 11-12% in last year and around the same level of the 2018-19 period.

 A teller at work at a Viettinbank transaction office in Hanoi. Vietnam credit growth is set to return to its pre-Covid-19 level in 2021. Photo: Cong Hung. 

SSI Securities Corporation made the forecast in its latest banking outlook report released on January 6, referring to the roll-out of Covid-19 vaccines globally that could lead to a positive economic rebound around the world.

“Recovery in international trade, production and consumption will help stimulate demand for credit,” added SSI’s report.

The retail loan market is expected to return to the uptrend growth following a disrupted period in 2020, especially at the current low-interest environment and banks are considering to ease loan conditions.

Meanwhile, the issuance of Government decree No.81 on July 9 with an aim of tightening the issuance of corporate bonds could turn companies to banks’ loans, in turn contributing to higher credit growth.

SSI also expected consumer loans to rise along with positive prospects of the economy.

Another securities firm Viet Dragon Securities Company (VDSC) also gave a similar forecast of Vietnam’s credit growth at around 13%, citing improvement of business confidence and economic activities as main reasons.

“The monetary policy stance is likely to remain supportive in 2021 in order to help firms and households experiencing prolonged economic hardship,” noted the VDSC.

The State Bank of Vietnam (SBV), the country’s central bank, could promote a reduction in financing costs and lower borrowing costs. “With an estimate for inflation of 3.5% for 2021, deposit rates are near historic lows but the cost of funding could be lower due to the lag effect,” stated the VDSC.

HSBC in its latest macro-report noted Vietnam’s economy is set to benefit from a tech-led recovery, consistent FDI inflows and numerous trade agreements in 2021 to reach a GDP growth of 7.6%.

While Vietnam has emerged stronger from Covid-19 than others, its economy, nonetheless, needs support for those hard-hit businesses and consumers. However, fiscal support is limited, given the Government’s self-imposed 65% pubic debt-to-GDP ratio.

Given Vietnam’s limited fiscal space, monetary policy has done most of the heavy lifting to drive growth. 

HSBC expects the central bank to keep its monetary policy on hold until the second quarter of 2022, before possibly delivering a 25bp rate hike in the next quarter, bringing its refinancing rate to 4.25% by year-end 2022.

RELATED NEWS
TAG: Vietnam credit growth loans banks SBV central bank SSI VDSC covid-19 pandemic nCoV
Other news
19:35, 2022/35/30
Key issues discussed for better e-commerce tax collection
Experts have analyzed the key problems that have prevented better collection of tax on electronic transaction in Vietnam.
18:17, 2022/17/30
Vietnam’s 9-month budget revenue equals 94% of year’s target
This year's budget revenue could exceed the target of VND1,410 trillion ($59 billion).
13:20, 2022/20/23
Vietnam c.bank raises policy rates first time in two years
A higher interest rate cap would have a direct impact on banks, businesses, and people.
15:06, 2022/06/19
Central bank rules out expanding credit growth target
The SBV set the credit growth target at 14% this year, higher than the 2020-21 period, which was 12.17% and 13.61%, respectively.
15:39, 2022/39/15
Vietnam's bond market expands to nearly $100 billion
The growth was driven by both the Government and corporate bond segments.
07:00, 2022/00/11
Authorities urged to address businesses' “inflating” capital
In a broader sense, such a practice would cause negative impacts on the stock market and the confidence of investors.