What is the outlook for credit growth in 2022F?

TCB, MBB, and VCB recorded the highest loan book growth rate of 15.7% YTD, 12.8% YTD, and 11.5% YTD in 9M21, respectively. Photo: Transactions at VCB

In 9M21, system credit rose slightly to 7.9% YTD at end-3Q21 to VND9,917tn, driven by strong credit growth of industry and trade. Credit demand for both industry and trade has recovered to 12.2% YTD and 10.5% YTD, respectively after the subdued performance in 2020. Meanwhile, construction loans were nearly flat (0.5% YTD) as lockdown, disruption in the supply chain of materials and equipment, and increase in prices of materials restrained construction projects nationwide.

Three state-owned listed commercial banks (BID, VCB, CTG) which accounted for 33.8% country lending market share delivered 9.1% YTD of credit growth, higher than the system level. The total loan book of 17 listed banks which made up 65.3% of system credit rose to 9.5% YTD at end-9M21 from 8% at end-1H21. TCB, MBB, and VCB recorded the highest loan book growth rate of 15.7% YTD, 12.8% YTD, and 11.5% YTD in 9M21, respectively.

System credit was at 10.1% YTD as of 25 Nov 2021, up 2.2% pts just after nearly two months, and higher than the growth rate of 8.4% YTD in 11M20.

On the deposit side in 9M21, M2 improved to 6.4% YTD at end-3Q21 from 4.4% YTD at end-2Q21, but lower than the growth rate of 7.9% YTD of system credit. Total deposits of institutions and individuals which accounted for 82% of M2, grew 5.3%ytd (11.3% YoY) to VND10,550tn at end-9M21 from 3.8% YTD at end-1H21, lower than that of 7.9% YTD (12.6% YoY) at end-9M20. Deposits of individual growth slowed down to only 2.9% YTD. VNDirect believes that individuals have been searching for higher yield investment instruments (corporate bonds, stock market, property market) amid declining deposit interest rates in 9M21.

Aggregate deposits of customers of 3 state-owned commercial banks which made up 27.1% of M2 (or 33.1% deposits of institutions and individuals) increased 7.5% YTD, higher than the system level. Total deposits of customers of 17 listed banks which accounted for 51.3% M2 (or 62.7% deposits of institutes and individuals), rose 7.1% YTD at end-9M21 from 4.8% at end-1H21. The top 3 banks that posted the highest deposits of customers growth rates in 9M21 were TPB (36.7%), TCB (14%), VIB (13.5%).

System credit growth is estimated to improve in 4Q21 and reach at least 12% in 2021F. VNDirect believed that Vietnam's normalization since October with the current Government’s supporting packages and low lending rates would boost businesses to resume and make new loans for their operations, accelerating credit growth. “2022F system credit to grow 13-14%, driven by (1) strong rebound in manufacturing and trading activities with the increase in external and domestic demand; (2) low lending rates to trigger borrowing demand for house buyers; and (3) higher public investment disbursement rate”, VNDirect forecasted.