Credit growth in Vietnam may reach 13-14% this year, partly driven by progress with the COVID-19 vaccine, according to a 2021 banking outlook report released by the SSI Securities Corporation on January 6.

Vietnam beginning human trials of a COVID-19 vaccine is likely to give the domestic economy a push in 2021, the SSI said.

Its 2021 forecast is higher than the estimated 11-12% in credit growth last year.

The expected recovery of foreign trade, production, and consumption this year will boost the growth of lending, with retail lending likely to bounce back to pre-pandemic levels, according to the report.

The retail lending market recorded a compound annual growth rate (CAGR) of 28.5% between 2016 and 2019, which slowed to 8.3% in the first three quarters of 2020 compared to the beginning of the year.

Increases in lending demand may be supported by low interest rates and commercial banks’ expected moves to loosen lending standards to pre-pandemic levels when signs of economic recovery are more evident.

Additionally, as the government tightens control over the issuance of corporate bonds under Decree No 81/2020/ND-CP, businesses may shift to bank loans for funding. The total value of corporate bonds sold in the first nine months of last year was VND245.5 trillion, equal to 2.8% of total credit.

The SSI also expects standards for consumer loans to return to roughly what they were before COVID-19 broke out in the second half of 2021, further fuelling overall credit growth. Consumer loans accounted for about 1.6% of total outstanding loans last year.