Customers make transactions at a bank in Hanoi. As the real estate and consumer sectors are forecast to gradually gain strong recovery in the second half of 2024, the credit growth target of 15% this year is completely feasible. (Photo: vietnambiz.vn) In 2023, credit growth was lower than expected but improvedsignificantly in the last months of the year. The low credit growth wasprimarily due to inflation, high lending interest rates, weak economy, lowexports and real estate market freezing.
However, analysts believed credit will increase significantlyagain in 2024 thanks to a loose monetary policy and a low interest rateenvironment. In that context, the banking industry, which is sensitive tointerest rates, will be the first to benefit.
Under a 2024 strategy report released recently, analysts fromVNDirect Securities Company forecast credit growth will reach about 15% in2024, based on the 6-6.5% GDP growth target. With the global economic recovery,firms’ loan demand for working capital is expected to increase again in thefirst half of 2024.
"As the real estate and consumer sectors are forecast torecover with strong growth in the second half of 2024, we believe that thecredit growth target of 15% this year is completely feasible," VNDirectsaid in the report.
According to VNDirect, VPBank, HDBank, MB, LPBank, VIB andTechcombank are expected to lead in credit growth this year. At the same time,the banks will also have a net interest margin (NIM) larger than the industry’saverage rate. VNDirect forecast NIM of the entire banking industry at 4.6% in2024.
However, VNDirect’s analysts assessed that the business models ofVPBank and Techcombank are inherently sensitive to market fluctuations.Therefore, the two banks will recover quickly following the recovery of thegeneral market, but at the same time will be more vulnerable if the marketsituation changes negatively.
In contrast, HDBank, MB and VIB have stable business models,demonstrated by sustainable profit growth or low non-performing loan (NPL)ratios.
In fact, the State Bank of Vietnam (SBV) has also targetedcommercial banks to focus on lending right at the beginning of this year.Instead of only allocating a part of credit growth quota for banks at thebeginning of the year as previously, the SBV this year has assigned the entirecredit growth target of 15% for banks from January.
According to SBV Deputy Governor Dao Minh Tu, the allocation ofall credit growth quota in the first month of this year is expected to boostaggregate demand and create favourable conditions for banks to provide capitalto meet the needs of economic growth as difficulties are forecast to continuein 2024./.
VNA
