Calculation for risk-weighted assets will be stricter under Basel II standards, the capital adequacy ratio (CAR) of these banks will decline further once the new rules come into play. Fitch Solutions Macro Research, a unit of Fitch Group, stated in a newly-released outlook for Vietnamese banks that although the balance sheets of banks have notably improved over the past two years and have been helped by robust economic growth, the banking sector continues to be plagued by a wide range of legacy problems, including a weak regulatory framework, crony capitalism, and State – directed lending. Combining tighter lending criteria with a slowdown in economic growth, Fitch Solutions expects credit growth to slow to 13 per cent in 2019, down from an estimated 14 per cent in 2018, which is somewhat in line with the State Bank of Vietnam’s (SBV) lower credit growth target of 14 per cent in 2019, versus 17 per cent for 2018. Though Fitch Solutions expects Vietnam to remain a regional growth outperformer, it is unlikely to be spared from the synchronized global growth slowdown. Of note, Vietnam’s high and growing degree of economic openness will likely see the slowing global growth momentum act as a drag on the country’s export performance in 2019, following an export… Read full this story
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