BIDV and AfDB publish a report on the Vietnamese financial market | Business

Illustrative photo (Source: VNA)

Hanoi (VNA) – The Investment and Development Bank of Vietnam (BIDV) and the Asian Development Bank (AfDB) co-organized a workshop on May 25 to announce a report on The Vietnamese financial market in 2021 and its outlook for 2022.

BIDV Senior Executive Vice President Tran Phuong said it was the result of research conducted by a team of experts from AfDB and BIDV.

This is the first time that a Vietnamese financial institution has collaborated with AfDB to make a comprehensive assessment report on the Vietnamese financial market, covering the areas of banking, securities and insurance, he noted.

Looking to 2021, the report indicates that the global economy has recovered quite quickly with a rapid increase in inflation due to the reopening of socio-economic activities in the majority of countries. The global financial market continued its rapid recovery given the new normal situation and strengthening confidence.

Against this background, Vietnam’s economy recovered quite quickly thanks to an appropriate change in epidemic prevention strategy, which allowed reopening from the beginning of the fourth quarter of 2021. As a result, growth in the quarter rose 5.22% from minus 6.02% in the third quarter, helping the economy grow 2.58% for the year as a whole. Meanwhile, inflation was kept low at 1.84% last year. The Vietnamese financial market has maintained a positive growth momentum thanks to a stable macroeconomics and the implementation of fiscal and monetary policies in favor of people and businesses.

In the banking sector, the combined profit before tax of 29 commercial banks which account for 80% of the market jumped by almost 32%, while their operating costs fell by 15%. At the same time, the banking sector continued its debt restructuring and support programs for clients affected by the pandemic for a total value of VND 52 trillion in 2021 and VND 20-25 trillion in 2022.

The stock market saw the benchmark VNIndex increase by 35.7% and the market capitalization increase by 48.4%. The number of trading accounts reached a record 1.5 million.
The insurance market maintained a growth trend, with revenues reaching VND 217 trillion in 2021, up almost 19% from the previous year.

However, the report points to emerging risks in the banking market such as rising potential bad debts, an increase in financial crimes, downward adjustments in the stock market or market manipulation.

BIDV Chief Economist Dr. Can Van Luc said Vietnam’s economy is expected to recover better this year to grow by 5.5 to 6 percent. Such growth should also be accompanied by a high inflation rate of around 3.8 to 4.2 percent, he added.

Luc said the financial market will benefit from the recovery, with profits in the banking sector expected to increase by 20-25% on annual average and the insurance market continuing to grow. The stock market, meanwhile, should make the necessary adjustments to become more stable and healthy.

The recommendations made in the report relate to the completion of a legal and policy framework on the treatment of bad debts and the cleaning up of securities and bond markets, the improvement of risk control in the financial system and the acceleration of the establishment of institutions and a legal corridor for the management and development of the digital economy, digital finance and digital banking./.

ANV

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