The Statistics Department of the State Bank of Vietnam released survey on business trend of credit institutions and foreign bank branches (hereafter called credit institutions) in the second Quarter of 2017. The survey was conducted from February 25, 2017 to March 9, 2017 with the participation of all credit institutions in Vietnam. The ratio of answering was 89.5%. with using of balanced method for analysis.
Business environment creates motivation for banking development
Upon the assessment of credit institutions, the internal and business environment factors in the first Quarter 2017 had been unclearly improved as compared to the fourth Quarter 2016. However, credit institutions expected the subjective and objective factors of business environment will be significantly improved in entire year 2017 and banking business will continue growing in second Quarter of 2017.
The comprehensive output of balanced indices showed that, in 2017, the internal factors are projected to be better improved, of which the best improvement are reflected via customer services and policies (with the balancing index of 47%), followed by creative and innovative capacity; and human resource with balancing index of 46%.
Regarding to objective factors, demand of the economy on banking products and services, management scheme and prudent regulations of banking system are expected to be stronger improved than other factors.
Business performance of credit institutions in the first Quarter 2017 slightly improves
According to credit institutions, their business performance of credit institutions had been improved in the first Quarter 2017, and was expected to be continuously improved in entire 2017. Particularly, 59% of credit institutions noted that business conditions of the first Quarter 2017 were better improved than they were in the fourth Quarter 2016; 72.5% of credit institutions expected business conditions continue to be improved in the second Quarter 2017 as compared to the first Quarter 2017. 83% of credit institutions expected their business will be better in the entire year 2017 as compared to the last year of which 20% of credit institutions saw it would be much improved while 63% credit institution said it would be improved insignificantly.
Profit before tax of 2017 is expected to increase greater than 2016
For 2017, 90.4% of credit institutions expected that their profit before tax will be higher than that of 2016 with an average growth expectation of the whole banking system would be much greater as compared to the expectation noted in the survey of December 2016 (increased by 13.4%).
Specifically, net income from interest, fee and services, and from Proprietary trading of credit institutions are all expected to grow significantly.
The price of banking products and services are forecasted to be stable
The credit institutions forecasted that the demand of clients on banking products and services to continue moving actively in the first Quarter 2017, in which the demand of banking payment and card using will record the highest increase (specifically 42.5% of credit institutions rated high level growth for this demand); followed by the demand of capital borrowing (with 37.4% of credit institutions rated high growth for borrowing demand), followed by the deposit saving demand (with 35.5% of credit institutions rated high level for this demand).
For the second Quarter 2017 and the entire year 2017, credit institutions are optimistic about the outlook of increasing demand on banking product and service.
Specifically, 65.6% of credit institutions expected total demand of customers on banking products and services would continue to increase in the second Quarter 2017 while only 55.7% of credit institutions had the same expectation in the previous survey. 68% of credit institutions expected the demand on capital borrowing will be higher than the demands on banking payment service and card using and deposit saving.
The movement of demand structure is appropriate with seasonal features of the economy that causes the increase of borrowing demand for the aim of investment in production and business in the second Quarter annually instead of payment service demand occurred before and after Traditional New Year.
Almost credit institutions stated that they have maintained average prices of banking products and services in the first quarter and they planned to keep the price stable in the second Quarter 2017. For 2017, 50% of credit institutions expected to maintain their average price; 20% of them expected to slightly reduce the prices while 29.8% of credit institutions would slightly increase the average price of their products and services.
Banking liquidity is forecasted to be plentiful in 2017
Banking liquidity was sufficient in the first Quarter 2017 for both VND and foreign currencies and it is expected to be maintain plentiful in the second Quarter 2017 and the entire year 2017. As compared to the first Quarter 2016, the liquidity of the first Quarter 2017 was better than the expectation of credit institutions at the survey conducted in December 2016.
The expectation of Credit institutions on liquidity of 2017 was unanimous with the previous survey. The recent survey showed that most of credit institutions expected the banking liquidity continue to be at good condition for both VND and foreign currencies.
The sufficient liquidity of banking system creates a good base for stabilizing interest rates, capital cost and NPL resolution. This is an essential condition for maintain lending interest rates in order to support enterprises and accelerating domestic production and business, contributing to reaching the economic growth target of 6.7% for 2017.
Risk management is more effective as compared to the previous quarter
In this survey, 72,8% of credit institutions accessed that the average risk of client groups at a normal level; 13% of credit institutions said low level and 14.1% said high level (the figures were 69%, 16%, 15% respectively for the previous quarter survey).
It is forecasted that in the coming time, from 59 to 67% of credit institutions expected the common risk will be stable in the second Quarter and for the whole year 2017. There is 7.3% of credit institutions expected the risk would decrease in the second Quarter and for the entire year 2017.
Almost credit institutions accessed that NPL ration of their bank unchanged in the first Quarter or decreased as compared to the fourth Quarter 2016; they expected to keep NPL ratio stable or decrease in the second Quarter 2017 and the entire year 2017.
Most credit institutions expected common interest rates stable in 2017
The credit institutions forecasted the common interest rates would remain stable in 2017 while capital mobilization and lending will face a certain fluctuation.
The capital mobilization of banking system is expected to grow by 5.58% in Quarter 2017, and grow by 16.23% in the year 2017 that slightly decreases as compared to estimated ratio of 16.76% noted in the survey in December 2016.
Total credit of banking is expected to increase by 5.81% in the second Quarter 2017 and increase by 17.23% for the whole year 2017 (lower than expectation ratio of 20.09% of the last year survey and the real increase ratio of 18.25% of the same period of the last year).
The survey showed that 21.2% of credit institutions agreed that they are lack of appropriate workers to meet the recent operations, even thoug 36.8% of credit institutions stated that they had recruited employees in the first quarter.
It is estimated that to the end of 2017, 58.6% of credit institutions would increase the number of their workers as compared to the 2016.