Credit growth slows down
A recent report by VNDirect Securities said that the State Bank has granted credit limits to a number of banks last week.
Accordingly, MSB achieved the best limit among banks, mainly due to its much lower LDR ratio than other banks.
Other banks granted room are HDBank with 11%, ACB 9.8%, Vietcombank 9.8%, VIB 9.5%, Techcombank 9.5%, TPBank 9.1%, VPBank 9%, MB 9%, BIDV 8.3%, LienVietPostBank 8%.
According to VNDirect, these are banks with diverse credit portfolios, participating in supporting weak credit institutions, healthy asset quality and abundant liquidity such as Vietcombank, ACB, HDBank , MSB, etc.
Regarding credit, experts forecast that credit growth will slow down and reach about 12% in 2023 due to the poor real estate market, slowing export growth and high interest rates.
VNDirect's first credit limit and credit growth forecast.
In addition, inflation is expected to remain high due to a 20.8% wage increase effective from July 2023 and price increases in services such as healthcare , public transport, etc. Limited liquidity (although somewhat improved) is also a factor slowing down credit growth this year.
According to data from the State Bank, as of February 24, credit in the entire economy increased by only 0.77% and money supply increased very slowly by 0.05% compared to the end of 2022.
In addition, systemic liquidity stress has been occurring since the third quarter of 2022. In 2022, M2 money supply increased by only 3.6% compared to the beginning of the year (as of the end of November 2022); much lower than the credit growth of 14.8%, showing existing liquidity pressure and the credit balance/mobilized capital ratio (LDR) of banks have increased significantly compared to 2021.
Bancassurance is no longer the “golden goose”
Most banks have recorded strong growth in service fees from banca activities (exclusive insurance distribution through banking channels) in the 2020-2022 period as many life and non-life insurance companies have continuously promoted cross-selling of products through banks.
For the life segment (where the majority of the bank's banca fees come from), new business revenue through the banking channel has grown exponentially over the past few years, from 20% of total new business fees in 2018 to 40% in 2021.
In 2023, VNDirect forecasts that service fee growth from the banking industry's banca operations will slow down significantly due to economic difficulties that negatively affect consumers' income.
Accordingly, due to the need to buy insurance, management agencies are stepping up inspections of banking activities amid information about bank borrowers being forced to buy insurance or customers depositing money being given unclear advice by bank employees, making customers think that investment -linked insurance products are savings deposits.
According to a report at VNDirect, HDBank, ACB, and VIB have total operating income from banca at 9% (data from 6 months of 2022), 7% (full year 2022), and 6% (full year 2022), respectively.
HDBank's insurance business revenue in 2022 is also twice as high as in 2021. Notably, among the top banks in insurance business, only HDBank does not have an exclusive partner. This once again affirms the bank's internal strength and potential in the banca segment.
Regarding recent and possible banca cooperation deals in the near future, VPBank and LienVietPostBank have signed exclusive insurance agency contracts with AIA and Dai-ichi respectively in 2022.
VPBank recorded VND5,500 billion in prepaid fees from this deal in the first quarter of 2022. In the case of LienVietPostBank, VNDirect believes that this bank may have started recording part of the prepaid fees in the fourth quarter of 2022. However, this figure has not been officially announced by LienVietPostBank.
As for other banks, the analysis team believes that only HDBank is expected to sign a new banca contract this year - if it happens, it will likely have a positive impact on the bank's profits and shares .
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