Low interest rates predicted to remain for last two months of 2021

While interest rates will remain low, a further cut is unlikely. Photo: baodautu.vn

Although the supportive monetary policy of the State Bank of Vietnam (SBV) will be maintained via low operating interest rates and the credit room is expected to be eased in the near future, a further reduction of interest rates is unlikely due to existing inflationary pressures, said KB Securities.

Moreover, the risk of bad debts increasing in the next few quarters as loans gradually mature may cause commercial banks to maintain a high net interest margin to make room for provisions, thus lending rates are unlikely to be cut.

On the other hand, according to the financial statements of commercial banks, by the end of the third quarter of 2021, the credit growth of listed banks was 7.7per cent year-to-date, of which state-owned banks (except for Agribank) and joint stock commercial banks all recorded positive growth, reaching 7.8 and 8.8 per cent year-to-date respectively.

Commercial banks with good loan growth in the first nine months of 2021 include Techcombank, TPBank, VIB, LienVietPostBank, MB, and MSB.

Notably, the growth of corporate bonds greatly contributed to the 9M21 credit growth of many banks such as Techcombank, VPBank, MB, and TPBank.

In the first nine months of 2021, most joint stock commercial banks have approached their allotted credit growth caps for this year by the SBV.

KB Securities raises its credit growth forecast in 2021 to 12 per cent from 10 per cent.

Thanks to accelerated vaccination programmes in major localities, the pandemic is coming gradually under control, social distancing regulations are gradually lifted and less likely to be tightened again, capital demand will soon recover, corresponding to the recovery in the production and consumption sectors.

In particular, Q3 data shows that the asset quality of commercial banks was not much affected by social distancing, which is the basis for the SBV to soon grant more credit room to banks with good asset quality and capital adequacy ratio.