SBV extends timeline on ST capital/M-L loans
20/08/2020 - 13:00
- The SBV has extended the deadline for banks to comply with the cap on short-term capital to medium and long-term loans ratio.
- The deadline has been pushed back by one year.
- The announcement was issued by Circular 08/2020/TT-NHNN which amends Circular 22/2019/TT-NHNN. The new Circualr will be effective from Oct 1st, 2020.
Boosting financial system liquidity. The delayed implementation of the cap will help reduce the pressure on banks to raise medium- to long-term funding. This should benefit funding costs and NIM for the sector.
Positive for NIM. Banks have been ordered to cut or delay loan repayments to COVID-affected borrowers and to provide reduced interest rates than the pre-pandemic levels. The new Circular should help offset the impact on NIMs among the banks.
Not much short-term impact for credit growth, but it should be helpful in the medium term. Capital absorption is weak due to the impact of Covid-19. In the first seven months of 2020, credit growth was only 3.5% (versus 7.1% in the same period of 2019). However, we believe that capital demand from real estate companies remains high, so the amended policy might help inject capital into this segment in the medium term.
A marginal positive for profitability. Given the macro uncertainties, the amended policy might not provide much benefit for banks in the short-term. However, in the medium-term, the policy will help boost liquidity for banks and increase NIM.
For the complete report, please access here: SBV extends timeline on ST funding to M-L term loans ratios
Analyst, Tanh Tran: email@example.com