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KBSV: Banks Q3 results will be more positive with credit room extension


In the newly released strategic report, KB Securities Vietnam (KBSV) assessed that the third quarter of the banking industry will be more positive thanks to the increase in credit room by the State Bank, which is expected to be implemented in the middle of July and will help boost lending activities of the whole industry. However, the analysis team does not expect the new credit level to increase too much because the SBV is tightening cash flow to control inflation.

Regarding real estate lending, KBSV expects the SBV to gradually loosen up on personal loans to buy houses. This information will have a positive impact on the performance of banks as well as on stock prices.

In addition, the average deposit interest rate of the whole industry in 2022 is expected to increase by 0.3 - 0.5 percentage points compared to the end of 2021, however, the CASA rate of the whole industry is maintained at a high level, which will reduce the impact of raising deposit interest rates. Besides, lending interest rates are predicted to increase from 0.1 to 0.3 percentage points, although lower than the increase in deposit rates, it will also have positive effects on net profit margin.

On the other hand, a low base level in the third quarter of 2021 will also be a driving force for banks to record higher profit growth in the third quarter of this year.

Regarding difficulties, according to the analysis team, the time for debt restructuring for customers according to Circular 14 will expire on June 30, 2022 and there is currently no information on the extension of the time limit. Therefore, the bad debt ratio of the whole industry in the third quarter will increase when the loans are allocated to the right debt group.

According to KBSV, the bank's stock price has experienced a deep decline of about 30% since the beginning of the year due to the impact of tightening real estate credit, low credit room and bad news related to corporate bond market. Combined with a better outlook on business results in the second half of the year, the analyst team considers this an attractive valuation for the industry.

Experts at KB Securities believe that the main risks to the banking industry's outlook include (1) a rapid increase in bad debt from real estate businesses when real estate credit is still tight; (2) the extension of the credit room not approved by the State Bank until the end of the third quarter; (3) higher-than-expected inflation prompting the SBV to continue tightening credit cash flow.


Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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