Industry Trend Analysis - Positive Outlook But Overly Loose Credit Poses Downside Risks - JAN 2018


BMI View: Vietnam ' s robust economic growth outlook and accelerating reform momentum support our positive view on the banking sector. However, most Vietnamese banks are still recovering from the aftermath of the 2012 banking crisis, and we caution that an extended period of rapid credit growth could stoke a credit bubble again, which the system is ill-prepared for.

We hold a relatively sanguine view on the Vietnamese banking sector highlighting that the country's strong real GDP growth outlook and positive banking reform momentum are two of the biggest upside factors. That said, we caution that many banks are still recovering from capitalisation and asset quality issues from the 2012 banking crisis, and the ongoing rapid credit growth, aided by an accommodative monetary policy could stoke a credit bubble again, which the banking system is not equipped to handle.

Robust Economic Outlook The Prime Upside Factor

Credit Growth Shifting Into Higher Gear
Vietnam - Loan Growth, % chg y-o-y
BMI, IMF

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