Growth in the first half was 7.33 percent against the end of last year, according to the State Bank of Vietnam (SBV). In the first half of 2018, the figure was 7.86 percent against the end of 2017.

BIDV Securities (BSC) expects full-year growth to only reach 12-13 percent mainly due to declining demand from businesses in industries facing difficulties such as property, steel and consumers goods amid stalling economic growth.

Many property firms turned to corporate bonds this year as the government continued to tighten credit to them to prioritize lending to manufacturing.

Steel manufacturers face growing protectionism and have been slapped with five anti-dumping and two subsidy lawsuits by India, the U.S. and Malaysia, according to the Ministry of Industry and Trade.

MB Securities (MBS) predicted credit growth not to exceed 12.5 percent, saying high loan interest rates and prudent fiscal policies by the government and the SBV would slow it down.

Short-term lending interest rates are currently 6-9 percent and medium- and long-term rates, 9-11 percent, it said.

Analysts at MBS said a slowdown in credit growth is necessary since outstanding loans are already at a very high level as a ratio of GDP. Although at 130 percent it is still at a safe level, deceleration is needed to control asset quality.

According to BSC, interest rates are expected to remain at current levels and could inch higher by the end of the year. Average interest rates are higher than in 2018, but are unlikely to see much volatility.

Dao Gia Hung, deputy director of VPBank’s small and medium-sized enterprise lending department, said interest rates could rise at the end of the year since demand for loans is usually higher then. But in the long run interest rates would remain stable and could even go down, it said.

Both securities companies forecast banking profits to be modest after last year’s record high.

"Pressure from interest rates, retail lending competition, regulatory changes, and pressure to raise capital from subordinated debt will squeeze the bottom line," BSC said. It forecast the industry's pre-tax profits to grow by 12.8 percent this year. 

Post-tax profits were up 31.3 percent last year.