Banking business expected to be improved in the whole year 2017

According to result of latest survey on business trend of credit institutions conducted by Statistics Department of the State Bank of Vietnam, 64% of total credit institutions participated in the survey affirmed that business conditions of Quarter II 2017 gained noticeable improvement as compared to Quarter I 2017.

The balanced indexes are on the increasing trend. Credit institutions are optimistic on the improving trend of business conditions with 82% of credit institutions expected that they will be strengthened as compared to 2016; 25% of credit institutions expected on their significant improvement. For the whole year 2017, 90.6% of credit institutions believed that their profit before tax getting positive growth of 13.2% in averagely as compared to that of 2016. The expectation was lower than that of 18.56% recorded in the last survey. The net income from services and self business are both expected to be improved remarkably.

For subjective and objective factors of business environment in 2 first quarters of 2017, credit institutions assessed that they were improved as compared to end 2016, of which subjective factors were much better improved. Among subjective factors, the most improved factors were customer policy and customer care services (the balanced index reached 41.5%). For objective factors, the index of “Demand of the economy on banking products and services” and index “Management and regulation on safe performance of banking system issued by the SBV” were improved stronger than other factors. Credit institutions expected subjective and objective factors of banking business environment continue to be improved strongly in 2017 as compared to 2016.

Credit institutions assessed that the demand on banking products and services in the first six months 2017 had been improved remarkably, the comprehensive balanced index on total demand increased from 19.44% in end of Quarter I 2017 to 23.16% in end of Quarter II 2017, of which the demand of borrowing capital increased noticeably to 25.6% as compared to 21.43% at end of Quarter I 2017, which followed by demand of depositing that increased from 16.6% in end of Quarter II 2017 in comparison to 13.4% of end Quarter I 2017.

Banking liquidity of entire system continued to be remained good and improved as compared to the previous quarter. It is expected that in Quarter III 2017 and entire year, most credit institutions believed that their liquidity continued to be remained good in both VND and foreign currencies.

It is noticeable that, the soundness index of customer groups was confirmed by credit institutions to be improved very clearly, specifically, 79% credit institutions said that the average risk level was at moderate, 14% of credit institutions affirmed it was at a low level and only 7% of credit institutions concerned the risk was at a high ratio.

The balanced index of risk trend showed a decrease space from 0.61% (recorded in survey conducted in end of quarter IV 2017) to 0.54% (noticed in survey conducted in end of Quarter I /2017); and it sharply decreased to minus 3.85% (-3.85%) in survey conducted in end of Quarter II/2017. The figures illustrated a significant decreasing trend of risky customer groups, especially for the group of “other credit institutions” (the balanced ratio reduced from -11.7% to -16.5% and -31.9% respectively in above mentioned surveys). The group of private customers the balanced ratio reduced from 1.3% to -0.54% an -12.4% respectively in above mentioned surveys.

The group of economic organizations was recognized as the most successful in reducing the risk trend, specifically, the group of foreign investment enterprises took the lead followed by the state owned enterprises.

On this basis of assessment, majority of credit institutions affirmed that their bad debt ratio was unchanged or slightly reduced as compared to Quarter I 2017 and bad debts continued to be expected to reduce in Quarter III 2017.

Capital mobilization and lending expected to grow stable

Credit institutions expected capital mobilization of entire system to grow by 4.72% averagely in Quarter III 2017 and will increase by 16.02% in 2017, of which mobilizing capital in VND will grow by plus 16.59% (+16.59%) and plus 1.14% (+1.14%) in foreign currencies.

Mobilization in VND continues to contribute mostly in general growth of mobilizing capital of banking system.

Outstanding loans of entire system was expected to grow by 5.09% in averagely of which lending in VND increase would be plus 5.68% (+5.68) and in foreign currencies would be plus 1.62% (+1.62%) in Quarter III 2017; and for the entire year of 2017, general growth of outstanding loans would be 16.33% as compared to 2016.

VMH