Unlocking Credit Growth: A 4.5% Surge and VDSC’s Prediction of a Crucial Reversal for Listed Companies

The latest strategic report for July by Rong Viet Securities (VDSC) predicts a rebound in the growth rate of total assets for companies listed on the HSX in Q2. This forecast is based on credit growth, which has increased by 4.5% year-to-date and approximately 14% year-over-year, according to the latest reports.

This prediction is rooted in the understanding that banks remain the primary channel for capital allocation in developing economies like Vietnam. As such, credit growth serves as a reliable indicator for gauging the close relationship with asset growth in the economy, a correlation that has been evident in recent years.

VDSC anticipates that asset turnover has bottomed out in Q1 2024 and will trend upwards in the upcoming quarters. The “declining lending rates and signs of bottoming out” effect will no longer overshadow the “credit growth” effect, which has been weak throughout 2023 and Q1 2024. Additionally, improved production and consumption growth figures across quarters provide a basis for expecting improved asset turnover in other sectors as well.

Regarding net profit margins, VDSC believes that seasonal factors and the potential for bad debt risks may lead to slight adjustments in net profit margins for the banking sector compared to Q1.

Considering these factors, VDSC forecasts a recovery in revenue compared to the previous quarter, although growth remains lower than the previous year. Estimated profit after tax is expected to increase by 13% year-over-year.