Banks slash interest rates

Last week, the Board of Directors of the Vietnam National Petroleum Group (Petrolimex) approved a plan to divest capital from PG Bank, which means the bank will have a chance to seek a new strategic shareholder to increase its capital after 12 years. Earlier in January, the Sumitomo Mitsui Banking Corporation (SMBC) was likely to complete capital divestment from Eximbank. Meanwhile, VPBank is working to sell 15% of its stake to a foreign partner. Once the deal finishes, it will be one of the banks with largest equity in the system. In a directive issued earlier this year, the State Bank of Vietnam (SBV) no longer banned banks from paying cash dividends. Accordingly, this year, many banks are preparing to pay cash dividends such as VPBank, TPBank, VIB and ACB. In its Directive 01/CT-NHNN, the SBV also encouraged banks to pay cash dividends in shares to increase charter capital, improve financial capacity and credit supply to the economy, and stabilise market interest rates. … [Read more...] about Bustling M&A deals in banking industry at year beginning

Deputy governor of the State Bank of Vietnam (SBV) Dao Minh Tu has said that bad debts are climbing for both credit organisations and the wider economy. "It is an ongoing challenge to manage bad debts and banking activities will be seriously affected over the next few years," said Tu. He said that the woes would be revealed more clearly as the ratio of on-balance-sheet bad debt continues to grow due to inflation and interest rate rises. At the end of 2022, bad debts were classified based on the groups of borrowers and economic issues like recovery and inflation curbing. Can Van Luc, a member of the National Monetary and Financial Policy Advisory Council, said that on-balance-sheet bad debt could reach 2.3-2.5 per cent and gross bad debt could hit 6 per cent in 2023, rising into 2024. As the regulations on unchanged debt groups in Circular No.14/2021/TT-NHNN expire, economic recovery could suffer. According to the SBV, at the end of 2022, the ratio of … [Read more...] about Bad debts continue to soar at commercial banks

The latest move from the Fed marked eight consecutive rate hikes since March 2022, with no signs that it has reached the peak of its hike journey. Assoc. Prof. Dr. Dinh Trong Thinh, a financial expert from the Vietnam Association of Financial Advisers, predicted that a rate hike of 25 percentage points was anticipated. Thinh stated that, in general, the pressure on the USD/VND exchange rate from the Fed’s interest rate hike is not significant. Pressure on to support new economic growth, photo Le Toan Dr. Le Dang Doanh, former head of the Central Institute for Economic Management, also believes that the Fed’s interest rate rise is targeted to contain inflation in the US, since inflation has begun to fall from the previous year’s low level. The USD price will adjust as a result. “A change in the price will influence the exchange rate between it and VND, impacting import-export businesses and foreign-invested enterprises,” said Doanh. On the other hand, deposit interest … [Read more...] about Pressure on to support new economic growth

The Government’s active stance to address macro challenges would fuel the stock market development in 2023. The benchmark Vn-Index is forecast to expand by 15% at the end of 2023 to hit 1,160 following a turbulent year for the stock market, according to SSI Securities Corporation (SSI). Investor at a securities company in Hanoi. Photo: Pham Hung The Vn-Index from its peak of 1,530 in early 2022 plummeted to a low of 874 in mid-November, a downturn which experts attributed to major events, such as the Russia-Ukraine conflict, arrests of business executives for market manipulation, and the Government’s tightening credit into high-risk fields. As of late 2022, however, the market’s price-to-earnings (P/E) ratio was considered quite attractive with an estimated 9.2x, 35% lower than the average rate of 14.16x during the 2009-2022 period. SSI’s latest report also pointed out another positive factor in the expectation of a more stable value of the Vietnamese Dong … [Read more...] about Vn-Index set for steady growth in 2023

Nguyen Tri Hieu, Economist This had shown in financial markets: the stock market lost more than 30 per cent of its value; the corporate bond market and real estate market became frozen; the gold market fluctuated strongly; and banks scaled up interest rates to attract depositors. The State Bank of Vietnam (SBV) then had to expand the credit room many times for banks in 2022 and by the end of the year had raised the credit ceiling to 15.5-16 per cent. In 2023, investors do expect the stock market to rally, and in fact the market did recover slightly before dropping again, showing that Vietnam’s financial market is still unstable. In this context, the bond market is still frozen. The Ministry of Finance is considering amending regulations on the corporate bond market to restore development. Meanwhile, the war between Russia and Ukraine continues to escalate and is likely to widen tensions. The world economy has been plagued with high inflation in many countries. In the US, … [Read more...] about Gauging efficient investment channels for the year

Nguyen Minh Tuan, Founder of TOPI The risk of a world economic recession is reflected in the average GDP growth forecast of only 1.6-2.2 per cent, of which the US accounts for 0.5-1 per cent, the EU -0.5-0.2 per cent, and China 4-4.5 per cent. After plenty of efforts by central banks inflation has cooled down, but is still high. The common global inflation forecast in 2023 is 6.5-6.6 per cent, which is in line with forecasts from the International Monetary Fund and the Organisation for Economic Co-operation and Development. Optimistic banks assessed that in the second quarter of 2023, inflation would decrease, and those with more pessimistic views forecasted that the decline would take place by the end of 2023. Of course, along with inflation, tight monetary policy will affect world economic growth. Accordingly, there are three scenarios for macroeconomic forecast in 2023. One is a negative scenario: persistent inflation and deep recession, with the following assumptions of … [Read more...] about Optimism abounds for more positive scenarios in macroeconomic forecasts

According to chairman of the Vietnam Real Estate Brokers Association Nguyen Van Dinh, Vietnam’s real estate market is not repeating the crisis cycle which occurred in 2012. Varying factors to determine the fate of real estate, photo baodautu.vn “Currently, urban development is high and infrastructure investment is taking place strongly, along with the rocketing increase demand for housing. So the demand for investment in real estate is rather high. These are the factors that create a great motivation for the market’s ability to recover,” Dinh told VIR. Banking and finance expert Can Van Luc added that the market will be revived by the end of the year. “When banks have new credit room, real estate will see more transactions from homebuyers. Real demand is expected to be a bright spot during the year,” Luc said at a forum on forecasting the real estate market organised by the Vietnam Real Estate Association in Hanoi on January 3. Do Thu Hang, senior director of … [Read more...] about Varying factors to determine the fate of real estate

Vo Tri Thanh *Vo Tri Thanh Viet Nam achieved and exceeded 14 out of 15 targets assigned by the National Assembly for 2022 with many impressive numbers including GDP growth, export turnover and the number of newly-established and re-opened businesses. Only labour productivity was under expectations. Viet Nam’s labour productivity was expected to increase by between 4.7 per cent and 5.2 per cent on average in 2022, higher than the average growth rate of 4.7 per cent in 2021 but behind the target of 5.6 per cent set for the whole of 2022. On January 10 this year, the Government issued Resolution No 06/NQ-CP on the development of a modern, efficient, sustainable and integrated labour market serving quick socio-economic recovery, setting the average labour productivity target for 2023 at more than 6.5 per cent. Labour productivity is an important economic indicator that is closely linked to economic growth, competitiveness and living standards within an economy. According to … [Read more...] about Viet Nam wrestles with labour productivity issue when heading to innovation-based development

Vietcombank sold the dollar at VND23,690, up 0.21% from Monday. Techcombank’s rate was at VND23,720, up 0.25%. ACB maintained its rate at VND23,700, same as Monday. The greenback is sold at VND23,550 on the black market, down 0.04%. The State Bank of Vietnam (SBV) raised its reference rate up 0.04% to VND23,621. The dollar has depreciated against the dong by 0.17% since the beginning of the year. Globally the dollar eased on Tuesday from its rally at the start of the week, but hovered near a one-month peak as traders raised their forecasts of U.S. Federal Reserve interest rate levels needed to tame inflation, Reuters reported. Sterling was last 0.27% higher at $1.2054, after tumbling to a one-month low of $1.2006 in the previous session. The euro gained 0.12% to $1.0739, having slid to $1.0709 in the previous session, the lowest since January 9. … [Read more...] about Dollar gains against dong

Asian markets squeezed out gains Tuesday, giving investors some relief from a recent sell-off fuelled by worries that US interest rates will go higher than feared following last week's blockbuster jobs report. January's rally has come to a halt this month as investors contemplate an extended period of high borrowing costs aimed at bringing down inflation from multi-decade highs. While there are signs that price rises are slowing, and the Federal Reserve acknowledged progress in its battle last week, the employment data Friday was seen as a body blow for many. The reading, which showed more than half a million new posts created in January, led to speculation the Fed could have to unveil even more rate hikes this year, while any chance of a cut before 2024 all but evaporated. Focus is now on a planned speech later in the day by central bank boss Jerome Powell, with observers looking for any change from his less hawkish comments after last week's policy decision. "Powell remains … [Read more...] about Asian markets rebound from Fed sell-off but traders still uneasy