Diagnostic expectations and credit cycles

Vietnam posted inspiring results in 2022 and the GDP target for this year is set at 6.5 per cent. What will be the major challenges to the economy, and the banking and financial sector in particular, in 2023? Economist Nguyen Tri Hieu Vietnam’s economic growth of 8.02 per cent for 2022 is impressive on the surface while the country was going through many difficulties and uncertainties during that year. However, the result is of quantitative nature. There are often two aspects in assessing the economic development: qualitative and quantitative. Quantitative aspect comprises a basket of indexes, from GDP growth indices and inflation rates to import-export and investment figures. However, those indexes do not present the whole picture of economic development. In terms of qualitative growth, Vietnam’s economy has encountered a raft of problems in the past year. Albeit the inflation rate remains low, people have continuously been affected by spiking fuel and food prices. … [Read more...] about Expectations on the horizon

Workers process shrimp for export on a production line. — VNA/VNS Photo Vu Sinh The seafood industry grew rapidly in the third quarter of last year, but there are signs of a slowdown in the fourth quarter and it is expected to continue this year, particularly in large markets. According to experts, even though rising inflation has a negative impact on import markets and high material costs result in declining profit, seafood businesses are still supported by some positive factors. KB Viet Nam Securities Company (KBSV) said that the seafood industry has already hit its peak. The securities firm expected that seafood exports are not optimistic as higher inflation caused stagnation in purchasing demand. Moreover, some enterprises’ profits hit peaks in 2022, which is a sign that the industry is entering the declining cycle. KBSV also sees the prices of raw shrimp and pangasius remaining high despite recent declines. Although material prices are expected to fall in 2023, high … [Read more...] about Seafood exports’ profit expected to fall in 2023

Viet Nam is considered an extremely promising market for the retail banking industry thanks to the characteristics of population growth, GDP per capita and fast economic development. Grasping that trend, many banks have been promoting retail lending activities to diversify credit portfolios and optimise profits. — Photo courtesy of VIB With the privilege of up to 50 per cent cashback on the Lazada Vietnam e-commerce platform and technologies first deployed by VIB, the LazCard credit card is expected to bring a great shopping experience to users during the year-end shopping season. Innovative and pioneering card trend in VN Viet Nam is an extremely promising market for the retail banking industry thanks to the characteristics of population growth, GDP per capita and fast economic development. Grasping that trend, many banks have been promoting retail lending activities to diversify credit portfolios and optimise profits. VIB is one of the banks which has seen its outstanding … [Read more...] about VIB’s new card gives big push to online shopping

Vietcombank was the first bank with equity exceeding $4.26 billion by the end of 2021. In 2022, four more banks achieved this figure – Techcombank, Vietinbank, VPBank, and BIDV. In 2022, the charter capital of many banks saw a significant increase, with some banks even recording a vast increase in charter capital. At the same time, banks continue to improve their capital adequacy ratio and apply international standards in risk management. More than 20 banks have applied Basel II standards. Notably, many banks have successfully applied Basel III with more stringent requirements, such as TPBank, ACB, VPBank, SeABank, NamABank, and OCB. Some banks are also partially applying or piloting Basel III implementation, including VIB, HDBank, Techcombank, ABBank, MSB, and Sacombank. Besides the growth in scale, banks’ development in customer base is significantly greater, with digital transformation being an indispensable factor. While in the past, it typically took a traditional bank 20-30 … [Read more...] about Modest bank growth projected this year

Entering 2023, inflation has emerged as the top concern for the Central Bank of Vietnam (SBV). Specifically, inflation was predicted to be above 5 per cent within January. As China’s economy is now fully open, global pricing remains unpredictable, while the US Federal Reserve is still on a path of raising and modifying interest rates. A transaction office of VietinBank (Photo: VNA) “Thus, the SBV is under pressure to implement suitable monetary policies,” said banking expert Nguyen Chi Hieu. BIDV chief economist Can Van Luc also said, “Amid the global economic downturn, some countries may fall into a short-term recession. In this context, Vietnam’s GDP growth is expected to slow in 2023 compared with the high base level of 2022.” However, the country maintains a good level of GDP growth at 6-6.5 per cent as a base scenario, Luc said. Exports are expected to rise by 8-10 per cent, while domestic and foreign investment is expected to rise by about 8 per cent. He … [Read more...] about Economists cautious on interest rate adjustments

Jim Ratcliffe's company INEOS has formally entered the bidding process to buy Premier League soccer club Manchester United, a spokesperson for the chemical firm said on Tuesday. The Glazer family, United's U.S. owners, said in November they had begun looking at options for the 20-times English champions, including new investment or a potential sale, 17 years after they bought the Old Trafford club. In August, British billionaire Ratcliffe, a long-time fan of the club, expressed interest in buying United, Reuters reported. "I can confirm that we have formally put ourselves into the process," an INEOS spokesperson said in a statement on Tuesday. United declined to comment when contacted by Reuters. The Times newspaper, which first reported the news, said formal bids were expected to start next month, with United potentially changing hands by the end of the season. Interest from the United States, the Middle East and Asia is also expected. Manchester United's shares rose … [Read more...] about INEOS confirms entering bidding process to buy Manchester United

The recovery process may start from the third quarter of 2023 onwards. As legal bottlenecks, lack of capital access, and challenges in raising capital from corporate bonds are major issues that have hindered the development of Vietnam’s real estate market,  experts suggested 2023 would be a turning point to address these shortcomings. Locals looking at a property project. Photo: Tieu Thuy Addressing supply-demand imbalance The year 2022 proved to be a dismal period for the real estate market, as changes in legal policies and the tightening of bank credit have almost frozen the market. Property developers, large or small, were forced to undergo restructuring to cut costs or postpone investment and construction activities. Others have put their plans to issue shares on hold, some even having to borrow capital outside the banking system at very high-interest rates to stay afloat. The real estate market entered a period of depression unprecedented in the … [Read more...] about Vietnam’s real estate market at turning point in 2023: Experts

Bank profits are forecast to be the bright spot in the fourth quarter 2022 financial report season, which takes place after the Lunar New Year. This will help bank stocks flourish. Customers at a Vietcombank (VCB) branch. By the end of 2022, Vietcombank's pre-tax profit reached nearly VNĐ36.8 trillion (US$1.6 billion), an increase of 39 per cent compared to 2021. Photo vietcombank Although the financial statements for the fourth quarter of 2022 have not been announced, according to analysts' forecasts, in 2022, the picture of bank profits will have a strong divergence, along with the return of the commercial banking group with State capital. After two years of "holding" growth to support customers affected by the COVID-19 pandemic, the profit of this banking sector has increased sharply again. By the end of 2022, Vietcombank's pre-tax profit reached nearly VNĐ36.8 trillion (US$1.6 billion), an increase of 39 per cent compared to 2021. This figure at BIDV was … [Read more...] about Bank stocks to flourish in 2023

The Wall Street giant plans to divest its positions over the next few years and replace some of those funds on its balance sheet with outside capital, Julian Salisbury, chief investment officer of asset and wealth management at Goldman Sachs, told Reuters in an interview. "I would expect to see a meaningful decline from the current levels," Salisbury said. "It's not going to zero because we will continue to invest in and alongside funds, as opposed to individual deals on the balance sheet." Goldman had a dismal fourth quarter, missing Wall Street profit targets by a wide margin. Like other banks struggling as company dealmaking stalls, Goldman is letting go of more than 3,000 employees in its biggest round of job cuts since the 2008 financial crisis. The bank will provide further details on its asset plan during Goldman Sachs' investor day on Feb. 28, he said. Alternative assets can include private equity or real estate as opposed to traditional investments such as stocks and … [Read more...] about Goldman Sachs to cut asset management investments that weighed on earnings

The capital structure of real estate last year suffered from the lack of other capital channels alongside, photo Dung Minh At the beginning of January, Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong said that boosting public investment disbursement, executing tax reductions and extensions, and modifying real estate prices would unclog cash flow through the economy. “Since Vietnam’s monetary and credit indicators have reached a warning level, over-reliance on bank loan sources may result in future issues,” Hong said. Currently, the SBV’s top aim is to guarantee liquidity and keep the system stable and secure. In addition, to eliminate obstacles for enterprises and individuals, the banking sector has emphasised reforms and simplifications of lending processes to enhance access to finance Hong also said that for many firms that could not qualify for loans, the state must implement credit guarantees and small and medium-sized company assistance measures. Almost … [Read more...] about Real estate stability on top of SBV agenda