Impact on the economy and the banking system:

• Debottlenecking the credit to production and economic activities (SBV’s guidance focuses on funding to manufacturing and consuming areas).
• A modest impact on the real estate sector due to a strict requirement on Short-term funding to Medium and long-term loans. Besides, public housing gets benefits from the above decision since it is one of the focusing sectors according to SBV’s guidance and also in the sectors list to be supported following the 2% interest rate support package.
• Positive impact on banks’ profit growth, but not too large given a moderate expanding limit. The banks that benefit the most are STB, HDB, MBB, TCB, VCB, VIB.
• Higher pressure on interbank and deposit rate (in the short-term). The main concern is deposit rate hikes on Banks’ NIM.
• Can expect one more credit expansion decision from SBV given the total credit growth impact in the system estimated at around 2%. There is 2% remaining room for the 14% growth target for the full year.
• Given the above factors, we maintain the “Neutral” recommendation for Banking Sector.