Vietnam: In troubled times, banks find reason for slight optimism

HA NOI (VNS) — At least 90 per cent of local banks believe that inflation will stay in the single-digits this year, according to a survey conducted by the State Bank of Viet Nam (SBV).

Nearly 70 per cent of banks predicted that the mobilised and lending interest rates for the Vietnamese dong would go down by about 2 per cent, the SBV’s Monetary Statistics and Forecasting Department said.

The survey also indicated that the price adjustment managed by the State would present the biggest risk to inflation control this year, followed by the change in monetary and financial policies.

Participants forecast that the average interbank exchange rate between the US dollar and Vietnamese dong would rise by 1-3 per cent.

Although the macro-economic situation remains weak, 90 per cent of banks are still confident in the country’s business outlook.

Half predicted the economic situation would improve this year and most expect pre-tax profits to increase, although they do not see gains rising above 20 per cent.

Most banks predicted credit growth would also improve compared to 2012, with gains between 10-20 per cent.

Capital mobilisation was expected to grow in line with banks’ credit growth. However, capital mobilisation of theVietnamese dong would be much higher than that of foreign currencies.

Banks are also expected to continue allotting capital to prioritised sectors such as agriculture and rural development, export and support industries in order to spur the country’s economic growth.

While many banks still take a cautious view of both the country’s economic condition and their business results in 2013, they have found reason to believe the situation will improve. Many expressed hope that the central bank would continue to cut interest rates, strictly handle any violations of the ceiling interest rate and create a healthy climate for currency trading performance