KEY POINTS

• Sluggish credit growth due to an unfavorable macro environment. Credit grew by 4.73% while deposits increased by more than 3% in the first half of the year.
• There have been 4 times of reducing policy rates since the beginning of the year. Lending rates decreased by 0.5%-3% while average deposit rates decreased by 1%-1.5%.
• Banks’ credit growth and profit are differentiated. SOBs recorded credit growth of around 5%ytd and maintained profit growth in the first half of the year. Meanwhile, joint stock commercial banks recorded differentiated credit growth. Total profit of listed banks decreased by 2%yoy.
• NIM narrows in most banks.
• The NPL ratio of the whole industry continued to increase, putting pressure on provision expenses. The bad debt coverage ratio remained above 100%.
• Expectations: Credit growth of the whole industry will reach 12%-13% for the whole year of 2023. Second half profit will grow by 5%-10% thanks to credit promotion and improvement in some business segments. NIM might be flat in the second half of the year.
• Investment outlook: maintaining the “Neutral” rating for the Banking Sector.