(TBTCO) – The fact that the State Bank has just allowed banks with high credit growth to proactively expand limits beyond the limits granted at the beginning of the year may cause bank profits to have a strong differentiation between banking groups. goods, due to differences in credit growth.
|In the fourth quarter of 2023, banks’ capital costs are expected to decrease further. Photo: TL
Opportunity for some banks to be “untied”
Recently, the State Bank (SBV) made a rather bold move, allowing banks to have the right to be flexible and proactive in lending during the remaining days of 2023.
Specifically, the State Bank announced increased growth for credit institutions publicly and transparently according to specific principles and criteria. Credit institutions whose credit balance by the end of November 2023 reaches 80% of the announced credit target will be proactively added to the increased limit based on the 2022 rating.
One of the criteria for expanding credit limits is that credit institutions focus credit on priority areas of the Government and lower lending interest rates to low levels in recent times. The State Bank of Vietnam said that the addition of this limit is the initiative of the State Bank and it is not necessary for credit institutions to request or request an addition.
Previously from the beginning of the year, the State Bank determined that credit growth in 2023 was about 14 – 15% and
Banking system liquidity is still abundant
At the end of November and early December, interest rates in the interbank money market continued to remain at a low level, showing that system liquidity was still quite abundant. Currently, the overnight lending interest rate is still only 0.17%, much lower than the interest rate ceiling of 5%/year according to the regulations of the State Bank.
be flexibly adjusted in accordance with developments and actual situations. By July 2023, the SBV has allocated credit limits to the entire system of credit institutions and foreign bank branches with a total growth rate of 14.5%.
After the past 11 months, economic growth is still facing difficulties, the economy’s capital absorption capacity and credit demand are still weak. By the end of November 2023, system-wide credit growth had only reached about 8.3%, lower than the target targeted at the beginning of the year.
Meanwhile, the credit growth rate of the credit institution system is uneven. Some credit institutions have quite high growth, some credit institutions have low growth, even negative growth.
Therefore, the State Bank said that allowing banks to have the right to be proactive and flexible in implementing lending at the end of this year is to promptly flexibly operate and meet the requirements of continuing to promote growth. credit growth to serve capital needs for the process of restoring economic growth under the direction of the Government and the Prime Minister.
Facing profit differentiation
The profits of banks until the end of the third quarter of 2023 are actually differentiated, in which some banks still achieve quite good profit growth, while some banks have experienced profit growth. negative compared to the same period last year.
Mr. Vu Manh Hung – analyst at VNDirect Securities Company, said that in the third quarter of 2023, 22 out of 25 listed banks had a decrease in net interest margin compared to the same period due to the low rate of increase in lending interest rates. faster than the growth rate of mobilization costs.
Among medium and large capitalization joint stock commercial banks, only Sacombank, VIB and VietinBank are able to maintain a stable or higher net interest margin over the same period. Meanwhile, the net interest margin of banks with a high proportion of corporate bond ownership continued to decrease the most.
According to Mr. Hung’s forecast, in the fourth quarter of 2023, banks’ capital costs are expected to decrease further thanks to low-cost deposits that will account for a higher proportion in banks’ capital structure. However, net interest margin may not improve immediately in the context of current weak credit demand.
Some banks with a high proportion of personal loans and a low proportion of USD deposits will have a better chance of improving their net interest margin than other banks. In 2024, net interest margin will likely recover thanks to the return of credit demand along with economic growth.
Giving forecasts on banks’ profits in the fourth quarter, Mr. Quan Trong Thanh – Director of Analysis of Maybank Investment Bank Securities Company said that if the fourth quarter forecast is applied based on information from profit of the third quarter, the growth of each bank in the fourth quarter was very good due to good credit growth.
From the point of view of experts, when assessing bank profits thanks to the credit growth factor and accordingly, banks that expand credit this time, if they take good advantage of the opportunity to continue promoting credit, can may have better conditions to create advantages in business efficiency than other banks.
Falling interest rates are a favorable factor for banks to boost lending at the end of the year
According to the State Bank, the average deposit and lending interest rates of new transactions of commercial banks are at 4.2%/year and 7.6%/year, down about 2% compared to the end of the year. 2022.
On the first day of December 2023, regular VND savings deposit interest rates at banks’ counters continued to decrease by 0.1 – 1.35%/year compared to the previous month. The highest deposit interest rate for a 12-month term is only 5.7%/year, the lowest is only 4.8%/year.
Deposit interest rates have hit the bottom of the Covid-19 period due to excess system liquidity in the context of weak credit demand. At the same time, lending interest rates will continue to maintain a downward trend in the last months of this year thanks to the recent rapid reduction in capital mobilization costs of commercial banks./.