According to a recent strategic report, ACB Securities Ltd., Co believes that provision costs for banks will start to increase from the fourth quarter of 2022, and profit in 2023 will be difficult to maintain the high growth rate as in 2022.
ACBS believes that banks will keep NIM at the same level as in 2021. Although interest rates have increased by a total of 2% since the beginning of the year, lending rates also tend to increase accordingly.
Previously, business results of the banking industry continued to be positive in the third quarter of 2022. The third quarter profit of banks in the VN-Index increased by 55.7% over the same period. Profit growth driver comes from net interest income and non-interest income grew well, increasing by 31.4% and 17.4% respectively over the same period and provision expenses decreased slightly by 1.8% year on year as the pressure of provisioning for restructuring debts was no longer significant.
The asset quality of banks is generally still at a good level, but there are signs of a slight decline. The bad debt ratio at the end of the third quarter of 2022 was flat compared to the previous quarter, at 1.48%. Meanwhile, the debt ratio of group 2 increased by 22 basis points compared to the previous quarter to 1.42%. Restructured debt balance due to COVID-19 continued its downward trend compared to the previous quarter.
Recently, on December 5, the State Bank of Vietnam (SBV) announced to increase in the credit growth target of the whole credit system by 1.5% - 2%, raising the credit growth target for the whole year 2022 to 15.5% - 16%. Credit growth slowed down in recent months and reached 12.14% at the end of November, up slightly from 9.3% at the end of June.
Previously, the SBV had extended credit limits from 0.7% to 4% for banks with healthy operating results, with a total increase of 2% estimated in September, and granted additional credit lines to 4 banks in early October, bringing the total credit growth limit of the whole year in the banking industry to nearly 14%.
ACBS believes that the banking system is capable of providing new credit lines for the economy. In the context of corporate capital difficulties, the increase of the credit growth limit by the State Bank as above will help reduce liquidity pressure for businesses at the end of the year. Notably, the SBV has clearly stated that banks with good liquidity and low lending rates will be granted a higher credit growth limit.