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Strong credit demand and low deposit rates help profitability, and net profit grew 65.1% y-o-y in 1Q21. The sector is also benefitting from rising ROE – 16.8% in April – a level last seen in January 2012. Non-performing loans remained low at 2.1%.

Experts Point out the Sectors Benefit from Vietnam’s Economic Recovery
Recently, HSBC released the report in which HSBC experts gave out many predictions on Vietnam’s stock market and economy. 
Banking is one of the best performing sectors. Liquidity remains flush, putting downward pressure on deposit rates. At the same time, credit growth was up 12.7% y-o-y in February.
Strong credit demand and low deposit rates help profitability, and net profit grew 65.1% y-o-y in 1Q21. The sector is also benefitting from rising ROE – 16.8% in April – a level last seen in January 2012. Non-performing loans remained low at 2.1%.
Consumption remains robust, with retail sales seeing record y-o-y growth of 30.9% in April as the economy recovers from the pandemic. Sales in consumer goods, accommodation, food and beverages all rose strongly. 
Consumer companies are in fact focusing on strengthening their premium portfolios and also starting to expand export markets. See Vietnam Dairy Products (VNM VM): Buy: Pressure from COVID-19 and costs, 29 April 2021 by Shuo Han Tan. In the auto segment, sales of passenger and commercial vehicles rose 32.7% y-o-y and 32.3% y-o-y respectively. They had fallen in the previous month due to a lower base due to the timing of the Lunar New Year.
The real estate market declined in terms of rent and occupancy in 1Q21. According to Savills, in Ho Chi Minh City (HCMC), occupancy was 8% y-o-y lower at 89% for commercial properties, while the sales absorption rate for residential property declined by 24% y-o-y to 42%. 
One factor was rising prices. Meanwhile, in Hanoi, the occupancy rate of retail properties rose 2%.
Macro indicators highlight strong growth momentum
GDP growth for 1Q21 came in at 4.5% y-o-y. In March, manufacturing industrial production recorded the strongest expansionary reading of 53.6 since December 2018. Inflation jumped to a seven-month high of 2.7% due to rising housing and construction material prices. Exports have played a major role in Vietnam’s recovery.
In terms of registered capital, FDI stands at USD12.3bn y-t-d (USD2.1bn in April), 0.7% down from the previous year. Most of the inflows went into manufacturing (42.4%), followed by utilities (41.3%). By country, most of the investment came from Singapore (39.6%), followed by Japan (20.5%). The VND appreciated 0.4% during April. HSBC FX strategists have a favourable outlook on the currency, with their VNDUSD forecast for 2021 at 23,100.
In the following section, we provide a comprehensive set of charts and tables providing a holistic view of Vietnam’s equity market, macro and economy, and key sectors.

DIEP NGUYEN