|Banks steady as profits keep rolling in, illustration photo |
A record profit of VND10.5 trillion ($456.5 million) is slated to be achieved by VIB in 2022, according to the bank’s annual shareholder meeting report, representing a 31 per cent increase over the previous year. The objectives for total assets, total credit balance, and capital mobilisation have all been raised by nearly 30 per cent, shared Han Ngoc Vu, CEO of VIB.
Tran Thu Huong, strategy director and head of Retail Banking at VIB, said, “The bank aspires to pioneer tailored offerings in order to fulfil the market’s growing expectations in the retail banking and insurance segments, to name a few.
Furthermore, VIB’s client base would be roughly thrice the size of the present one, with the primary focus being placed on younger demographics, accounting for approximately 85 per cent of its client portfolio.”
Furthermore, VIB’s market value is expected to expand fivefold, from $3.2 billion in 2021 to $14 billion in 2026, with an annual compound profit growth rate of at least 30 per cent.
Meanwhile, MSB officials revealed that its estimated profit for 2022 will reach VND6.8 trillion ($295.7 million), which is comparable to a growth rate of 30 per cent. Despite this lofty target, MSB’s management is convinced that a digitally-led strategy would foster its operational efficiency and current account saving accounts (CASA) while reducing operating expenses.
Meanwhile, Techcombank’s goal in the country is to achieve double-digit annual growth over the next 3-5 years, driven by a strong capital adequacy ratio. With a superior CASA, Techcombank could secure a higher net interest margin, while declining provisioning, which would help support the bank’s bottom line.
According to VPBank’s forecast, the parent bank’s credit balance is set to increase by 18-20 per cent, resulting in a CASA of 23-27 per cent. Compared to 2021, VPBank’s profit growth is slated to be more significant thanks to the recovery of its clients. FE Credit, its consumer finance arm, also aims to generate a profit of around $217-261 million.
Some state-owned banks have also revealed their preliminary business proposals for 2022 targets.
This year, Vietcombank intends to expand its total assets by 8 per cent, credit growth by 12 per cent, with the bad debt ratio to be below 1.5 per cent, and a pre-tax profit increase of at least 12 per cent. The industry’s profit leader, Vietcombank, maintained its triumph in terms of profit last year, with a consolidated pre-tax profit of VND27.38 trillion ($1.19 billion), up 19 per cent on-year.
Similarly, VietinBank anticipates a 10-20 per cent increase in individual and consolidated pre-tax profits in 2022; a 5-10 per cent rise in total assets; a 10-14 per cent climb in credit; and a bad debt ratio of less than 2 per cent. In the past, VietinBank made a consolidated pre-tax profit of VND17.59 trillion ($1.19 billion) in 2021, which was up 2.7 per cent from last year.
SSI Research forecasts Vietnamese banks’ average pre-tax profit growth will be 21 per cent in 2022, outpacing the 13 per cent growth rate of the 96 firms studied by SSI.
This projection, however, excludes the possibility of unusual revenue from exclusive upfront fees from bancassurance activities, or from the divestiture of subsidiaries of VietinBank, HDBank, Techcombank, or MB.
“Profits at state-owned banks are expected to expand at a rate of 19 per cent, while profits at other privately-held lenders are expected to grow at a rate of 22 per cent in 2021 owing to improved loan growth prospects. Additionally, profit growth will be moderate in the first half of 2022. VietinBank, Vietcombank, and MB might beat their milestones from the second quarter onwards, while other banks could witness favourable progress in the third quarter of 2022,” SSI observed.
Vietnam’s economy will soon rebound, with a 2022 GDP growth forecast of 6-6.5 per cent. The main growth drivers include the recovery of economic activities, especially in the service and tourism segments, boosted by the 2 per cent VAT reduction.
Moreover, a handful of economic recovery packages, public infrastructure investment, and incentive packages in some important sectors (including loans to renovate old apartments and build social houses as well as houses for workers) would enhance credit demand.
The above growth drivers will significantly promote investment demand and capital use. Therefore, in 2022, credit growth is expected to remain at 13 per cent, compared to 14 per cent last year.
In comparison with regional peers, Vietnamese banks are trading at premiums in terms of multiples. The profitability ratios of local banks are significantly higher. Profit growth is also expected to remain above 20 per cent in the medium term, reinforcing our belief that local bank valuations are reasonable.Source: Mirae Asset Securities