Credit institutions (CIs) comment that business activities are very active, the ratio of bad debt/outstanding debt balance continues to be kept at low levels and the downward trend is expected in 2019 versus 2018.
According to the results of the latest business trend survey conducted by the State Bank of Vietnam (SBV) in March 2019, most CIs comment that the business environment and their business results have been improved in the first quarter of 2019 compared with the previous quarter and expect that the results for the next quarter and for the whole year will grow more than the of previous year. They also expect for: interest rate level to be stable; capital mobilisation and credit to increase higher; the healthiness of customer groups to be improved positively; and the demand for banking products and services to increase.
The survey results show that the business situation of CIs in the first quarter of 2019 has been relatively good. In particular, 70.4 percent of CIs said that their business situation had improved, of which 14.3 percent indicated a “much improved” result compared to the previous quarter.
Forecasting the business in the near future, 80.6 percent of CIs expect the business situation to “improve” in the second quarter of 2019, higher than the rate of 79.3 percent of the survey in December 2018; and 88 percent of CIs expect the overall business situation in 2019 to be “improved” compared to 2018 (similar to what indicated in the survey in December 2018), of which 20-29 percent of credit institutions expect for “significant improvement”.
In addition to the expectation of good business results, 55.1 percent of CIs said that they had increased the number of labour at the beginning of this year. 25.1 percent of CIs commented that there was still a shortage of labour required for their operation. 61.23 percent of CIs expect to continue recruiting more staff in the next quarter.
According to CIs, the subjective and objective factors affecting their business operations all improved in the first quarter of 2019 compared to the previous quarter. Among objective factors, “Demand of economy for banking products and services” continues to be evaluated as better improved than other factors. Among the subjective factors, “Policy and customer services” and “Financial capacity” are evaluated as positively improved in the quarter.
Most CIs expect that in 2019 the two subjective factors, “Financial capacity” together with “Policy and customer services”, and the objective factors of “Demand of the economy for banking products and services” will continue to be strongly improved.
Demands of customers on using banking products and services (demands for loans, deposits, payment services and cards) in the first quarter of 2019 are evaluated at a positive level, “increased” compared to the previous quarter, and is expected to continue to grow in 2019. Demand for loans continues to be higher than demand for deposits, payment services and cards in the first quarter and following quarters of the year.
The survey results on customers’ credit healthiness also obviously improved. Specifically, the overall risk level of customers in the first quarter of 2019 was lower than expected and tended to decrease compared to the previous quarter.
Forecasting for result of 2019, CIs have adjusted their expectations in a more positive direction compared to the previous period with 67.01 percent of CIs indicating the overall risk of customer groups at “stable”, 14.43 percent CIs forecasting a “decrease” and only 18.56 percent of CIs showing concerns about the risk of “rising” (in previous quarter, the corresponding rates were 63.53 percent -15.29 percent -21.18 percent respectively).
On that basis, CIs recognised that the ratio of bad debt/outstanding debt balance continued to be kept at a low level and is expected to be on the down trend for the whole year of 2019 versus 2018. CIs said that the liquidity of the banking system was in a “good” situation for both dong and foreign currencies and is expected to continue to be positive.
Capital mobilisation and credit balance of the whole banking system is expected to grow at an average rate of 13.74 percent and 14.51 percent respectively in 2019 (higher than the actual increase in 2018).
