BVSC: 2021 credit growth at 13%

As Vietnam’s economy recovers, credit demand will increase and outstanding loans will rise sharply, according to a market data report from Bao Viet Securities Company (BVSC).

Short-term interbank interest rates, including the overnight rate, one-week rate, two-week rate, and one-month rate, are lower than the average this year and at their lowest level for two months.

The State Bank of Vietnam (SBV) has not yet taken measures to pump in or withdraw cash flow through purchasing T-bills or conducting open market operations (OMO). The volume of OMO and bills in circulation remains at 0.

With these developments, the banking system has the finances to support the recovery of the economy as Covid-19 is gradually controlled. As of October 7, credit growth was 7.42 per cent. “We therefore forecast credit growth of around 13 per cent for all of 2021,” the research team at BVSC emphasized.

Meanwhile, government bond interest rates are also down. As of the end of last week, the total winning volume in October was a relatively low VND10.7 trillion ($469.71 million). With the total issuance of government bonds expected to be VND135 trillion ($5.92 billion) in the fourth quarter, issuance pressure will accumulate over the final two months of the year.

However, the demand to buy government bonds will not see much in the way of breakthroughs in the context of a low yield environment. Credit is expected to recover at the end of the year and the need to restructure the government bond portfolio is not as high as at the beginning of the year. The winning yield is expected to remain flat into the near future.