Banks predict increased profits in 2024

Phung Quang Hung, deputy CEO and head of Customer Service and Advisory Division at Techcombank, expects that the retail and corporate customer segment will continue to drive the banking sector growth in 2024.

Hung believes that due to Vietnam’s continued efforts to maintain a low-interest environment to propel economic and credit growth, inflation may rise slightly.

“The demand for credit should pick up in a more conducive environment. Banks expect that many firms shall regain growth momentum in 2024. Several banks have also proceeded with digital transformation schemes, helping to institute a healthier business picture for the sector,” said Hung.

Pham Lien Ha, corporate finance director at Ho Chi Minh City Securities Corporation, said, "2024 will be more prosperous than last year as banks leverage their ample liquidity in a low-interest climate with looser monetary policies."

Ha estimates the 14 top banks should see around 20-21 per cent growth this year, compared to the 5.5 per cent seen in 2023.

These 14 banks are VIB, ACB, Sacombank, Techcombank, LienVietPostBank, OCB, HDBank, Vietcombank, MB, MSB, VPBank, VietinBank, BIDV, and TPBank.

Despite bank asset quality improving in the fourth quarter of last year, Ha believes there are still some concerns.

"The non-performing loan ratio of the entire banking sector was still fairly high by the end of 2023 at 4.8-4.9 per cent. The ratio at the 14 top banks was maintained at 1.67 per cent, slightly up compared to 1.5 per cent in late 2022," said Ha.

Ha explained that the 1.67 per cent ratio came thanks to a policy move from the State Bank of Vietnam amounting to $7.64 billion, equal to 1.35 per cent of the total outstanding credit balance of the system. If this ratio was added to the sector’s overall bad debt ratio or that of the 14 banks, the actual bad debt ratio would be quite high.

Many financial analysts believe that bank profits mainly come from net interest. If credit improves this year and grows by 15 per cent, compared to last year's 13.5 per cent, higher profits should be feasible.

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Heading into an enthralling 2024 Vietnam in 2023 could be most remembered for strengthening cross-border ties, pushing through new laws, or taking action to weather the storms created by trade issues, geopolitical conflict, inflation, and the post-pandemic landscape. CEOs, legal advisors, and directors across tech, banking, retail, real estate, and more reveal what they thought of the previous 12 months in Vietnam, and offer their projections for the barriers and boosts to come during the Year of the Dragon.