According to VCBS, the SBV's orientation towards commercial banks will continue to be shown and maintained in 2020, focusing on quality instead of increasing outstanding loans. Therefore, credit growth is forecast to grow slower than that of the period 2016-2017, and equivalent to 2018-2019, expected to not exceed 14% for 2020.
The analysis team also said that the operational safety ratios of the banking system will tend to tighten according to the roadmap to ensure long-term growth. Credit growth of credit institutions depends on the quality of assets and the level of meeting operational safety requirements. Accordingly, banks that have been recognized by the SBV to meet Basel II standards under Circular 41/2016 will continue to be given priority in granting credit growth limits. For the remaining banks, since the equity is not large enough to meet the increasing demand for credit, the need for capital increase is urgent to meet Basel II and other safety ratios.
Thus, a credit will focus largely on credit institutions with good asset quality, and a credit will be less satisfactory for credit institutions that have not yet settled outstanding debts.
Regarding mobilization, VCBS stated that regulations on the ratio of LDR and the ratio of short-term capital for medium and long-term loans can affect the capital mobilization of banks in 2020. The maximum LDR has been brought to the banking sector by the SBV to 85% for the whole banking sector, on the other hand, the maximum ratio of short-term capital for medium and long-term loans will be reduced from 40% to 37% by October 1/2020. This requires commercial banks having safety ratios close to the regulations to implement appropriate adjustments of mobilized capital.
In 2020, the factors that put pressure on deposit rates related to the intrinsic situation of the current banking system are in line with the orientation of the State Bank of Vietnam in raising risk management capacity, safety indicators and aiming to meet international standards on the banking system.
Along with Circular 22/2019 on ensuring prudential ratios and Circular 58/2019 on the management and use of State Treasury accounts, Commercial banks will need to make appropriate adjustments to their funding sources to meet the statutory provisions. This means that pressure on capital sources for banks will increase significantly. However, the target of stabilizing the interest rate level (for the whole year) is forecasted to be managed at a reasonable level by the SBV to support growth.
Thus, the overall deposit interest rate is expected to be under upward pressure but the expected increase is not large, focusing on long terms of 12 months or more. On the other hand, the problem of local liquidity may cause some banks to decide to anchor deposit rates higher than the general level of the system.
With the forecast of general mobilizing interest rate, the expected increase will not be large, along with the reasonable regulation of the State Bank, the expected lending interest rate will not have many changes and remain similar to the current level.
Read more: What Is The Expectation About The Economy, Exchange Rate And Inflation In 2020?