VCSC raises credit growth and NIM forecasts for banks in 2021
In its outlook report for the second half of 2021, Viet Capital Securities Company (VCSC) has a positive view on the recovery of the banking industry in 2021. Experts raised the forecast of credit growth of the whole industry this year from 10.4% to 15.7%; NIM (asset weighted) forecast from 3.66% to 3.85%.
According to VCSC, the driving force behind VCSC's adjustment of the above forecast levels is the fact that experts realize that credit demand in the economy is still strong and the willingness of governing bodies to set a higher credit growth target to sustain economic growth while keeping inflation under control.
At the same time, analysts believe that banks will successfully control credit costs as key sectors such as real estate, import and export and wholesale will be healthier in 2021 than last year. Therefore, it can offset the less positive performance in other lending segments.
The report argues that state-owned banks can maintain market share if the economy grows strongly and the state has enough resources to promote infrastructure projects, often those related to electricity generation or natural resources.
Previously, budget constraints at SOEs were a factor in project delays. Strong economic growth will spur the State's willingness to inject more capital or expand guarantees, leading to more banking activities in this sector.
Besides, with the view that interest rates have bottomed, VCSC forecasts interest rates will continue to stay low until the end of 2021. The 10-year government bond yield is at 2.2% and the difference with the 10-year US bond yield of about 80 basis points is pretty close.
VCSC's banking analysis team expects deposit rates to adjust and start inching up by the end of 2021, due to competition to finance credit growth. “We do not expect the SBV to raise the policy interest rate in 2021,” the report stated.
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