Domestic credit growth expected to reach five-year high in 2016

Financial institutions in Vietnam expect the banking system’s outstanding loans to increase 20.09 percent in 2016, the highest in the past five year, as per a report from the State Bank of Vietnam (SBV)’s Monetary Forecasting and Statistics Department.

Financial institutions in Vietnam expect the banking system’s outstanding loans to increase 20.09 percent in 2016, the highest in the past five year, as per a report from the State Bank of Vietnam (SBV)’s Monetary Forecasting and Statistics Department.

The banking system’s outstanding loans is expected to increase 20.09 percent in 2016

The report was made based on a survey of business trends among credit organisations in the country.

It stated that credit institutions adjusted their expectations on the growth of capital raising and outstanding debts in the year to a more rational level, which is still higher than earlier forecast.

Capital mobilisation is anticipated to develop at an average 17.54 percent in 2016, compared to last year’s expectation of 17.46 percent.

Meanwhile, the risk levels of customer groups are expected to drop significantly after 2015, providing a foundation for the banks to evaluate bad debt potentials in the future.

Some 80-90 percent of the financial organisations reckoned that the rate of bad debt will continue to fall in Quarter I and II from previous quarters. Most of the banks surveyed anticipate a lower bad debt rate this year, with 91.2 percent of them believing that the rate will be less than 3 percent.

Banks reported strong liquidity for both Vietnamese dong and foreign currencies over the entire banking system, and expect stable conditions for the whole year.