Fitch – Asia Insider https://asiainsiders.net All about Asia Tue, 14 Nov 2023 07:41:13 +0000 en-US hourly 1 https://wordpress.org/?v=7.0 https://asiainsiders.net/wp-content/uploads/2020/04/AI_Logo.jpg Fitch – Asia Insider https://asiainsiders.net 32 32 Fitch Ratings Bullish on Vietnam: Forecasts Robust Economic Growth Through 2025 https://asiainsiders.net/fitch-ratings-bullish-on-vietnam-forecasts-robust-economic-growth-through-2025/ Tue, 14 Nov 2023 07:41:13 +0000 https://asiainsiders.net/fitch-ratings-bullish-on-vietnam-forecasts-robust-economic-growth-through-2025

Fitch Ratings has recently unveiled its forecast for Vietnam’s economic growth in 2024 and 2025. According to the credit rating agency, the robust financial and monetary policies implemented by Vietnam domestically have not only bolstered its own economy but have also provided support to several others.

Fitch Ratings projects a 6.3% economic growth for Vietnam in 2024, followed by an anticipated surge to 7.0% in 2025, underscoring the positive impact of the nation’s fiscal strategies. The agency points out that Vietnam’s medium-term economic fundamentals remain favorable, offering promising prospects for the banking sector.

However, Fitch notes a slowdown in Vietnam’s economic growth to 4.3% in September 2023, attributed to weakened external demand and persistent challenges in the real estate sector.

In response to this economic landscape, on September 11, the National Assembly ratified the Decision on the 2024 Socio-Economic Development Plan. The approved plan sets a GDP growth target of 6-6.5% and aims for an average Consumer Price Index (CPI) growth rate of 4-4.5%. Some members of the National Assembly view these targets as ambitious, but Chairman of the National Assembly’s Economic Committee, Vu Hong Thanh, asserts that such aspirations signal the government’s commitment to achieving growth while maintaining flexibility in implementation.

Rong Viet (VDSC) supports the proposed growth targets, considering them appropriate. This assessment is based on expectations of a moderate recovery in the manufacturing sector, particularly among exporters. Furthermore, investment spending is projected to rise by 13% compared to the annual National Assembly budget plan and by 19% compared to the 2023 estimate. Notably, this does not include the unresolved capital portion of the economic recovery and development program, set to expire in 2024. The overall optimism is further fueled by increased business and consumer confidence stemming from reduced interest rates, fostering a more positive outlook for domestic economic activity in 2023.

Source: Vietnam Insider

]]> The coronavirus pandemic has made it harder for digital banks in Asia to thrive, Fitch says https://asiainsiders.net/the-coronavirus-pandemic-has-made-it-harder-for-digital-banks-in-asia-to-thrive-fitch-says/ Fri, 21 Aug 2020 05:13:00 +0000 https://asiainsiders.net/the-coronavirus-pandemic-has-made-it-harder-for-digital-banks-in-asia-to-thrive-fitch-says

Those looking to enter the digital banking space in Asia may find it harder to do so now as some opportunities may have been lost in the coronavirus pandemic, according to Fitch Ratings.

The pandemic has hit the global economy hard and is disproportionately affecting people and businesses with a “weaker” borrower profile — the customer segment targeted by many aspiring digital banks, said Tamma Febrian, associate director for financial institutions at the ratings agency.

“A lot of them are citing the unbanked and the underserved segment as their main target segment, and we think that the crisis currently will disproportionately affect them,” Febrian told CNBC’s “Squawk Box Asia” on Friday.

“What this means is that, technically, you’re talking about … potential reduced opportunities for profitable lending,” he added.

In addition, social-distancing measures and lockdowns around the world to slow the virus spread have forced many incumbent banks to improve their digital offerings, said Febrian. That could potentially close off openings for new entrants into the market, he explained.

‘Jury’s still out’

In a report earlier this week, Fitch said such challenges would be felt more in Asia’s developed markets where “competition from incumbent banks was already fierce.” Those markets include Australia, Hong Kong, Japan and Singapore where there are “dominant” incumbents.

But emerging markets such as India, Indonesia and the Philippines still offer the “greatest” opportunities for digital banks, said the agency. Those countries have low banking service penetration, which gives aspiring digital lenders “an easier path to critical mass,” it added.

“However, these countries are among the worst affected by the pandemic in the region, and even in the longer term, their potential may be hampered by lagging digital infrastructure,” read the report.

Meanwhile, Febrian told CNBC that many aspiring digital banks designed their business models during a “benign” economic environment. So, it’s uncertain whether those models can survive this economic cycle, notwithstanding their potentially more advanced technological capabilities, he said.

He added that the current crisis is a time for digital banks to evaluate their business models. That includes studying whether the risks they’re taking are within their risk appetite, and ensuring that margins they receive could cover potential future losses, he explained.

“The jury’s still out. We’re not at the point where the digital banks … can’t profit from some of these trends, but what we’re saying is that this is a tougher market for them to navigate and so they need to further refine their strategy.”

Source: CNBC

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