CREDIT INSTITUTIONS FORECAST BANK CREDIT TO INCREASE BY 4.4% IN Q1 2024

Outstanding loans of the banking system are forecast to increase by 4.4 per cent in the first quarter of 2024, according to the State Bank of Vietnam (SBV)’s survey of business trends of credit institutions in the first quarter of 2024.

Under the latest survey released last week, credit institutions forecast the rise of the outstanding loans in the whole year of 2024 would be 14.2 per cent, 0.4 percentage points higher than the forecast in the previous survey.

Under the survey, credit institutions also predicted deposit and lending interest rates to continually decrease slightly by 0.3-0.4 percentage points on average in the first quarter of 2024, and by 0.2 percentage points in the whole 2024.

Credit institutions also forecast that customers' demand for banking services would improve in the first quarter of 2024, but the rising rate would be lower than that in the fourth quarter of 2023. However, the demand in the whole of 2024 would improve more strongly. Notably, loan demand was expected to increase to higher than deposit demand, which would be different from 2023 when deposit demand was higher than credit demand.

The survey also showed the banking system's liquidity in the fourth quarter of 2023 continued to maintain a good state and improved more than expected. Credit institutions said the liquidity situation in 2023 was more abundant than in 2022, and they forecast it would continue to be abundant in the first quarter of 2024 and the whole year 2024.

Capital mobilisation across the credit institution system was expected to increase by an average of 2.6 per cent in the first quarter of 2024 and by 12.1 per cent in 2024, equivalent to expectations in the previous survey.

As for bad debts, credit institutions expected bad debt to slightly decrease in the first quarter of 2024 after inching up in the fourth quarter of 2023.

Under the latest survey, the business performance and pre-tax profit of the banking system in the fourth quarter of 2023 improved slightly compared to the previous quarter, but was much lower than the expected level recorded in the previous survey.

Of which, 78.6 per cent of credit institutions estimated their pre-tax profit in 2023 to grow positively compared to the previous year; 17.9 per cent of credit institutions estimated negative profit growth; and 3.6 per cent estimated no change.

Credit institutions expected their business performance to be better from the first quarter of 2024 and the whole year 2024, but pre-tax profit might recover more slowly than business performance.

Source: VNS