DNVN - The State Bank is directing to continue lowering interest rates in the last months of the year. However, the trend of lowering interest rates also depends on inflation factors as well as pressure from the US Federal Reserve (FED)'s actions related to the high possibility of an early interest rate cut.
Sharing with Vietnam Business Magazine, Mr. Phan Le Thanh Long - Consulting and Training Director of AFA Capital Company said that credit growth often rebounds at the end of the year. In December 2023, Vietnam's credit witnessed this remarkable growth with a growth rate of 4.35% compared to the previous month, bringing the growth rate for the whole year of 2023 to 13.5%.
Entering 2024, credit growth depends on many factors, including the recovery of business sectors. There is currently a great polarization between sectors.
Notably, the industry group with the leading recovery is real estate business. Credit is pouring into it quite a lot, showing that the real estate market is starting to recover. Although "hot" growth has not occurred, the recovery of cash flow in this industry group has returned.
Besides, enterprises in the export sector and infrastructure construction attraction are also contributing to credit growth.
“However, we see some difficulties that can affect credit growth. That is the story of bad debt. Banks will have to control very tightly if credit growth is aimed at achieving the target without ensuring credit quality,” Mr. Long noted.
According to the consulting and training director of AFA Capital Company, in the last months of the year, credit growth will increase sharply, but the State Bank's credit growth target of 15% is quite "challenging".
The State Bank is directing interest rates to continue to be lowered in the final months of the year. The question is, which direction will interest rates follow?
According to Mr. Long, the State Bank's interest rate management is still following a loose trend. Maintaining a low interest rate level to support the economy , creating a basic foundation for economic development. However, inflation is a factor that needs to be noted, which can affect the input interest rate (mobilizing deposits) of banks, affecting the output interest rate (lending).
In the current context, the credit market is still weak and the exchange rate is well controlled. At the same time, the FED's move related to the high possibility of an early interest rate cut will create more pressure on the credit market in Vietnam. Commercial banks will have the opportunity to slightly reduce output interest rates.
If inflation is affected by storm number 3, this could put pressure, at least in the short term, on the credit market. Rising commodity prices will put pressure on some banks on deposit interest rates. Especially for small and medium-sized banks with weaker liquidity, these banks can increase deposit interest rates.
“In this context, banks will have to find a way to lower output interest rates and thereby increase credit. Input interest rates tend to increase, and banks want to maintain profits as expected, which will be a pressure.
This is why I hold the view that output lending interest rates will remain flat and tend to decrease slightly, not decrease too much," Mr. Long commented.
Hoai Anh
Source: https://doanhnghiepvn.vn/kinh-te/tai-chinh-ngan-hang/nhung-thang-cuoi-nam-lai-suat-ngan-hang-theo-huong-nao/20240918092224807
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