Vietnam's credit growth this year could reach 5-6 percent, far below government projections, with the banking industry expected to face more difficulties in the last three months, Vietcombank
Securities said on Monday.
Loans as of Sept. 20 edged up just 2.35 percent from the end of 2011, while small banks could face a liquidity crunch late this year, the Hanoi-based brokerage said in its quarterly report for the July-September period.
Vietnam initially aimed for an annual lending expansion of 15-17 percent for 2012, against a growth of 14.4 percent for the previous year, but loans have been growing slowly, partly due to high interest rates and banks trying to avoid bad debt.
In June, a government minister projected the annual lending expansion at 12-13 percent.
"The question lies in the bad debt in the banking system and the health of the economy, which will shape corporate performance and their borrowing," said the brokerage, which is an affiliate of Hanoi-based Vietcombank.
The government has not adopted any measures so far to deal with bad debt, while macro conditions have not shown signs of sustainable recovery, it noted.
The outlook for the stock market is cautious and no breakthroughs are expected in the last quarter, the report said.
(Reporting by Vu Duy; Editing by Ho Binh Minh)
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Keywords: MARKETS VIETNAM STOCKSNEWS/BANKS