Credit growth will be 18 per cent in 2018 and the good growth rate will have positive impact on the business result of the entire banking sector, Vietcombank Securities Company (VCBS) forecast.

According to VCBS, the major driver will come from the scale of an expanding economy, which will lead to greater consumption demand. The demand for individual loans, mainly consumer ones, will continue to increase sharply. Total consumer outstanding loans as of the end of November 2017 were estimated to increase some 59 per cent compared with the end of 2016.

In the first half of 2018, VCBS said deposit rates will be maintained thanks to many supporting factors, such as stable exchange rate, tightly controlled inflation and positive changes in the bad debt settlement process.

However, it also forecast that the pressure on increased deposit rates will return in the second half of the year. Specifically, in 2018, the US Fed may raise interest rate by 3-4 times, thereby putting pressure on the interest rate in Vietnamese dong.

Besides this, the second half of the year will be also the time when banks strengthen credit operation with the loan to deposit ratio of the system rather high at 86.75 per cent, therefore many banks will have to readjust the interest rate margin to adapt to the market.

VCBS said it will be difficult to improve the net interest margin of the system in 2018. The reason is lending rates will be maintained at a low level to boost economic growth while interest rate competition will be more intense in the second half of the year when the banking system further boosts lending.

In addition, banks also need to improve capital structure to meet safety ratios in accordance with regulations of Circular No 6, which regulates the maximum proportion of short-term capital for medium and long term loans is 45 per cent. — VNS