The State Bank of Vietnam (SBV) had just released a report on the results of the Q3 business trend survey. There were 54.3 percent of credit institutions (Cis) expecting Q3 business results to improve better than Q2. In contrast, 15.3 percent of CIs were concerned that business results would decline. The average expectation of the whole system on the growth of profit before tax in 2020 continued to decrease compared with the hope in the previous survey.
Business results in Q2 continued to be reduced. 26.4 percent of CIs said that the above factor would decrease. In contrast, in the previous period, only 16.4 percent of credit institutions stated that business results in this quarter decreased compared to the last quarter from 65.7 percent at the time of the survey in December 2019 and from 47 percent at the time of March to 32 percent at this investigation.
According to the survey results, the comments of credit institutions on the trend of customer demand for banking products and services in the next time were the basis for them to make expectations about the growth rate of mobilisation and credit of the unit.
Capital mobilisation of the whole system expected to increase by an average of 3.1 percent in Q3 and by 8.3 percent in 2020. The growth of capital mobilisation in 2020 tended to decline through surveys and took place in all groups. Capital mobilisation for more than one-year term was forecast to grow higher than a deposit for terms of less than one year.
Credit institutions lowered their forecasts on the growth of outstanding loans in 2020 in two consecutive surveys. The credit of the banking system expected to rise by 3.5 percent in Q3 and by 10.5 percent in 2020, which was a decrease compared to the corresponding expectation of 13.1 percent to 14.1 percent of the two previous surveys.
Interest rates expected to decline in Q3 continuously.
The June 2020 survey recorded two consecutive quarters that credit institutions reported a decline in the business performance of the whole system. The overall risk level of customer groups, financials of customers, and the demand of the economy for banking products and services declined, the pressure to make provisions for high credit risks might affect the income and profit before tax of the banking system in the year.
CIs continued to reduce the average price of products and services to support customers facing difficulties due to the Covid-19 epidemic.
According to the survey results, in Q2, the credit system reduced the average price of products and services to support customers who were in trouble due to the Covid-19 epidemic. The trend of stabilising or reducing the cost of products and services would continue until the end of 2020. In particular, credit institutions assessed to reduce the interest rate, rather than reduce service fees.
The mobilising-lending interest rates continued to decrease in Q3 and the whole of 2020. In particular, the groups that accounted for the majority of the market hoped for lower interest rates.
The liquidity of the banking system at the end of Q2 was in a good state for both dong and foreign currencies. It was forecasted that in Q3, 38 percent to 58 percent of credit institutions hoped the liquidity of the banking system to continue to improve for both dong and foreign currencies.
The overall risk from customers was forecast to increase
Credit institutions assessed that demand for banking services in Q2 increased slightly compared to Q1 (34.3 percent compared to 31.1%) but was lower than the expectation in the previous survey (52%).
In particular, the demand for payment services was identified as increasing more. However, in Q3, the need to use products and services was expected to rise again (58.1 percent of CIs expected to grow). In particular, the demand for loans continued to be expected to increase, with 59 percent of Cis, of which 6.8 percent of CIs expected to rise sharply. At the same time, there were 45 percent to 46 percent of CIs wanted payment service demand and deposit demand to grow compared to the previous quarter.
The overall risk level of customer groups in Q2 was assessed to continue the upward trend, with 25.5 percent of credit institutions identified the overall risk of existing customers at quite high. The level of risk was likely to increase slightly in all customer groups, especially those of joint-stock companies, limited liability companies, private enterprises and customer groups of small and medium companies. Expected in 2020, compared to 2019, 52.4 percent CIs were concerned about the overall level of risks of the growing customer groups.
On the other hand, according to the assessment of credit institutions, business and financial conditions of customers and demand of the economy for products and services of the unit were the two most important factors affecting the business situation in Q2 and was expected to continue to impact in the whole year 2020.
