Banking sector seeks to build on last year’s strong growth

In a banking sector report published last week, MB Securities (MBS) forecast that the after-tax profit of banks would grow by 14.5 per cent on-year and 11.1 per cent on-quarter in Q4.

MBS projected a 172 per cent increase in TPBank’s Q4 profit compared to the same period in 2023, primarily due to the low base of the previous year. For VPBank, MBS anticipated a 108 per cent on-year rise in Q4 profit, driven by approximately 8 per cent credit growth since the start of the year.

OCB is forecast to achieve the most significant growth, with Q4 profit surging 300 per cent on-year. This impressive growth is mainly attributed to last year’s low base due to high provisioning expenses.

Banking sector seeks to build on last year’s strong growth, photo baodautu.vn

For state-owned banks, full-year results are also expected to be positive. A sector report released in late December by Vietcombank Securities (VCBS) projected that Vietcombank would achieve 10 per cent profit growth in 2024, BIDV 13.8 per cent, and VietinBank 12.4 per cent.

VCBS estimated BIDV’s total operating income in Q4 to reach approximately $1.05 billion, marking a 23 per cent on-year increase. For 2025, BIDV’s total operating income is expected to hit $3.73 billion, a 12 per cent rise.

Similarly, VCBS projected VietinBank’s total operating income for Q4 2024 to reach around $857.71 million, up 12.9 per cent on-year. For 2025, this figure is forecast to grow to $3.91 billion, a 15 per cent increase.

“VietinBank’s credit growth is expected to match the industry average, reaching 15.4 per cent in 2025. Our net interest margin is anticipated to recover in 2025, driven by both deposit and lending activities. With robust asset quality and a large provisioning buffer, VietinBank has sufficient flexibility to meet business targets,” VCBS added.

Last week, Agribank released its preliminary 2024 results. As of December 31, total assets exceeded $91.67 billion, up 10 per cent on-year, while outstanding loans reached over $71.67 billion, up 11 per cent.

Notably, Agribank’s pre-tax profit for 2024 rose by over 8 per cent, estimated at $1.15 billion. This marks the highest performance in four years following its restructuring efforts.

At the 2025 banking conference hosted by the State Bank of Vietnam (SBV) on December 14, Nguyen Quoc Hung, who is vice chairman of the Vietnam Banks Association, commended the sector’s 2024 achievements and emphasised the SBV’s coordination of sound policy with fiscal measures and other policies to address global and domestic developments.

“Credit growth has increased by over 12 per cent compared to the end of 2023. Most legitimate borrowers for production and business purposes have accessed loans at reasonable rates, with exchange rates, gold prices, and inflation remaining within manageable levels,” said Hung.

However, Hung highlighted challenges such as potential risks from non-performing loans (NPLs). Recovering NPLs is increasingly difficult due to uncooperative borrowers and constrained capital markets, pushing the burden onto bank credit.

At the same conference, Agribank CEO Pham Toan Vuong highlighted that in 2024, Agribank lowered lending rates four times, reducing rates by 1-2.5 per cent annually, significantly more than deposit rate cuts.

He urged the government to establish regulations for resolving NPLs and collateral issues to maximise NPL recovery. “For state-owned banks, mechanisms should allow for annual charter capital increases from retained profits, with a minimum of $416.67 million starting in 2025 to meet advanced Basel II standards,” Vuong said.

BIDV chairman Phan Duc Tu noted that by the end of 2024, BIDV expects to exceed all key targets set by the SBV and its shareholders.

“To address challenges in 2025, there is an urgent need for a comprehensive strategy to develop the green financial market effectively. The government should promptly issue regulations on classifying and identifying green projects, ensuring alignment between Vietnam’s criteria and international standards. Incentives such as tax and fee reductions should be introduced to pull in public and private capital,” Tu said.

Vietcombank chairman Nguyen Thanh Tung projected that by the end of 2024, credit growth would reach 13 per cent, with total assets exceeding $83.33 billion and NPLs controlled below 1 per cent.

To achieve 2025 goals, Tung proposed that the SBV extend the timeline for adjusting loan-to-deposit ratios for treasury deposits at commercial banks until the end of 2025.

“Additionally, the government should accelerate implementation of advanced Basel II and Basel III standards to enhance safety ratios and the banking system’s capacity to support economic growth.” Tung added.

SMEs call for genuine support from banking sector What small- and medium-sized enterprises truly need is not cheap capital, but the genuine support of the entire banking sector on their comprehensive green journey.

Banking stabilisation on cards with mandatory deals The domestic banking merger and acquisition landscape is being reshaped by mandatory transfers, marking a pivotal step in stabilising weak banks and strengthening the sector’s foundation.

Ownership of financial groups comes to fore The formation of financial business groups with banks at the core is set to dominate, but complex cross-ownership and capital being diverted to so-called backyard companies is still causing a headache for state authorities.