The Covid-19 pandemic is causing many difficulties for the production business activities of businesses and also the banking system.
The financial statements in the first half (H1) of 2020 of Vietnam Prosperity Commercial Joint Stock Bank (VPBank) showed that by June 30th 2020, the outstanding loans to the field of water supply, waste and waste water treatment and supply declined to 191 billion dong compared to the end of 2019.
Similarly, the outstanding loans to the field of transportation and warehouse decreased to 6.087 trillion dong compared to 7.286 trillion dong; to the field of accommodation catering services slightly fell to 9.765 trillion dong from 9.809 trillion dong. Particularly, the outstanding loans to the field of arts, entertainment declined to 244 billion dong compared to 293 billion dong compared to the end of last year.
The outstanding loans reflected in the semi-annual financial statements of Vietnam Technological and Commercial Joint Stock Bank (Techcombank) showed that real estate business, finance and insurance, agriculture forestry fisheries, health and social assistance activities, etc. all grew compared to the end of 2019; while other business activities all recorded decline in outstanding loans.
In particular, the strongest decline was recorded in the industries of wholesale and retail; automobile, motorcycle and motor vehicle repair, falling from 27.075 trillion dong as of December 31st 2019 to 24.230 trillion dong by the end of June 2020. Similarly, the outstanding loans to processing and manufacturing industry declined from 20.431 trillion dong to 18.620 trillion dong. Particularly, the lending to other service activities dropped from 7.814 trillion dong to 85 billion dong.
Meanwhile, according to Saigon Hanoi Commercial Joint Stock Bank (SHB)’s H1 financial statements, the lending to the minerals and mining industry dropped from 3.225 trillion dong as of December 31st 2019 to 2.741 trillion dong by the end of June 2020. Similarly, lending to real estate business declined from 22.302 trillion dong to 21.805 trillion dong; and lending to the field of arts and entertainment declined from 121 billion dong to 93 billion dong. Even the outstanding loans to healthcare and social assistance activities also fell from 74 billion dong to 59 billion dong. Particularly, the lending to other service activities decreased from 45.593 trillion dong to 39.481 trillion dong.
In addition to the business fields mentioned in the above, the financial statements of the three banks also pointed out the fairly strong reduction in outstanding loans to some sectors such as information and communications. The lending to this sector declined from 1.002 trillion dong as of December 31st 2019 to 650 billion dong as of late June 2020 at Techcombank, from 345 billion dong to 341 billion dong at VPBank, 507 billion dong to 287 billion dong at SHB.
Meanwhile, the lending to professional activities, science and technology went down from 842 billion dong by the end of 2019 to 300 billion dong as of late June 2020 at Techcombank. The lending to this sector also fell from 565 billion dong to 471 billion dong at VPBank, and from 103 billion dong to 82 billion dong at SHB.
Techcombank’s outstanding loans to administrative activities and supporting services nearly halved from 800 billion dong at the end of 2019 to 416 billion dong as of June 30th 2020. This number dropped from 1.476 trillion dong to 1.297 trillion dong at VPBank, and from 414 billion dong to 390 billion dong at SHB.
The latest report reviewing the Vietnam economic situation of the World Bank (WB) stated that “the impact in each sector and between sectors is significantly different, in which the sectors of tourism and transportation, processing and manufacturing of export products are the most affected.”
The survey results on credit trends of credit institutions which have recently been announced by the Department of Forecast and Statistics (the SBV) pointed out that although credit institutions still assessed that the credit demand would rise in H1 2020, the percentage plummeted from 91 percent of the surveyed credit institutions in the December 2019 survey to 64 percent in the survey at the end of June 2020.
Particularly, the expectations have been adjusted for the credit demand for investing in supporting industries; import-export; and home purchase for residential needs, investment and tourism business. The main reason is due to the economic growth developments, the changes in investment needs in production business activities, consumption, import-export investment opportunities, and the negative impact of the Covid-19 on the real estate market.
The survey results showed that credit institutions expected a significant improvement in credit demand of customers in the last six months of 2020, based on the forecast about the recovery of economic growth, opportunities, demand for investing in production and business and export and import.
According to credit institutions, they have lowered margin interest rates and non-interest fees in H1 2020 to support and increase customers’ access to credit.
The borrowing terms and conditions are expected to be more loosened for the loans to production and business activities, and credit card loans in the last two quarters of the year.
