BAD DEBT SEEN DROPPING IN Q2

Vietnamese banknotes are seen at a local bank - PHOTO: LE VU

HCMC – Vietnamese banks expect non-performing loans (NPLs) to fall and interest rates to remain stable in the second quarter of the year.

A survey on business sentiment by the Department of Forecasting, Statistics and Monetary and Financial Stabilization at the State Bank of Vietnam (SBV) found that NPLs declined in January-March and are forecast to drop further in the next three months.

Banks also projected the NPL ratio would fall by the end of this year, citing improved credit quality and economic recovery.

Interest rates continued to ease. Average deposit and lending rates in the first quarter dropped by 0.03 to 0.1 percentage point from the previous quarter, reversing earlier expectations of an increase.

For the second quarter, banks forecast deposit rates for terms over six months to rise slightly by 0.02 percentage point, while lending rates are expected to fall by up to 0.08 percentage point. The outlook is expected to hold through year-end.

Banks cited stable liquidity, stronger loan demand, and consistent monetary policy as key factors behind the forecast.

System liquidity remained stable in the first three months, surpassing both the previous quarter and earlier projections. This trend is expected to continue through Q2 and the rest of the year.

About 74-76% of banks reported improved business performance and higher pre-tax profits in January-March. Most expect continued improvement in April-June.

Employment rose modestly in the sector. Around 32.5% of banks hired new staff in Q1, while 21.1% reduced headcount. For Q2, 42-54% of lenders plan to recruit more staff. Few expect further job cuts.

Source: The Saigon Times