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A glance at Vietnam’s financial & banking industry 2020

A glance at Vietnam’s financial & banking industry 2020

Wednesday 01, 07 2020
As of June 19, 2020, Vietnam’s credit growth reached only 2.45% while insurance business activities met difficulties, and the stock market fell sharply with the total capital mobilization of 6 months decreased by 37% compared to the same period last year.

Low credit growth rate

According to Vietnam's General Statistics Office (GSO), in the first 6 months of 2020, the operation of the credit institution system was negatively affected by Covid-19 epidemic. As of June 19, credit growth reached the lowest level in the period of 2016 - 2020. Specifically, the credit growth of the economy reached only 2.45%. 

Meanwhile, total payment increased by 4.59% compared to the end of 2019 and capital mobilization of credit institutions increased by 4.35%.

Since the beginning of 2020, the State Bank of Vietnam has adjusted operating interest rates twice with a total reduction of 1% - 1.5% / year to support liquidity and create favorable conditions for credit institutions to access to low-cost capital. In particular, it has also reduced 0.6% - 0.75% / year on ceiling interest rates for deposits with term of less than 6 months, and 1% / year on ceiling interest rates for short-term loans in priority areas.

Currently, deposit interest rate for dongs is ranging from 0.1% to 0.2% / year for demand deposits and terms with less than 1 month, from 4% to 4.25% / year for deposits with terms from 1 month to less than 6 months, from 4.9% to 6.6% / year for deposits with term from 6 months to less than 12 months, while interest rates for deposits of 12 months and above stand at 6.5% -7.4% / year. 

Insurance is facing difficulties

Also affected by the epidemic, insurance business activities have faced numerous difficulties as people's income has dropped drastically in the period of social distancing, affecting the payment of valid insurance policies, and limiting access to new insurance packages.

In the first 6 months of 2020, insurance premium increased by only 11% over the same period last year (that in quarter 2 is estimated to increase by 6%), in which, life insurance premium increased by 13% and non-life insurance increased by 8%.

According to GSO, Covid-19 epidemic has a negative impact on insurance business, especially life insurance sector which requires face-to-face meetings with customers for consultation. Because insurance is not a kind of essential commodities, direct insurance transactions had to be suspended during the social distancing period.

Stock down

A glance at Vietnam’s financial & banking industry 2020

Meanwhile, Vietnam’s stock market has witnessed a sharp decrease as total capital mobilization in the first 6 months of this year decreased by 37% compared to the same period last year. However, the market is showing positive signs of recovery when the Covid-19 epidemic has effectively been controlled.

In June, Vietnam's stock market gradually recovered thanks to the good control of the Covid-19 epidemic which have helped business and production activities return to normal. However, in the first 6 months, total capital mobilized for the economy of stock market was estimated at only VND 94.6 trillion, a sharp decrease of 37% YoY.

As of June 26, VN-Index reached 857.38 points, decreasing 0.8% over the end of last month and 10.8% compared to the end of 2019. As of June 18, market capitalization reached VND 4,030 trillion, decreasing 8.1% compared to the end of 2019. Value of an average transaction in June reached VND 8,524 billion / session, an increase of 29% compared to the previous month.

In the first 6 months of 2020, average trading value on the market reached VND 5,633 billion / session, an increase of 20.9% compared to the average in 2019. Currently, there are 748 stocks and listed fund certificates, 894 stocks registered to trade on UPCoM with the total listed value and registered trading of nearly VND 1,422.8 trillion, increasing 1% over the end of 2019.

On the bond market, there are currently 492 listed bond codes with a listing value of VND 1,172 trillion, decreasing 1.5% compared to the end of 2019. The average trading value reached VND 7,120. billion / session in June, increasing 23.7% over the previous month. For the first 6 months, value of an average transaction reached VND 9,862 billion / session, increasing 7.1% compared to the average of 2019.

In the derivatives market, the average trading volume was 166,184 contracts / session, down 19% from the previous month. For the first 6 months of 2020 in general, the average trading volume reached 163,984 contracts / session, an increase of 85% compared to the previous year's average. At the end of May 2020, the number of derivative trading accounts reached 118,126 accounts, an increase of 7% compared to the end of the previous month.

>> 
Vietnam’s banking industry 2020

Source: thesaigontimes

 
Categories
Banking & Finance

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