Banks tipped to record 14% growth in 2023 profit: top broker

The banking sector is forecast to earn pre-tax profits of VND248.57 trillion ($10.6 billion) in 2023, up 13.7% year-on-year, according to SSI Securities.

SSI’s report on 13 banks showed that this growth would be lower than the estimated figure of 35% in 2022, with pre-tax profits reaching VND218.67 trillion ($9.33 billion).

The brokerage house added that the 2023 growth forecast is nearly half the 28% posted from 2017-2021, but better than than the 11.3% recorded from 2014-2015.

Private lender VPBank, which holds the biggest charter capital in Vietnam, may record negative growth of 13.6% in pre-tax profit this year, according to SSI. VPBank is listed on the Ho Chi Minh Stock Exchange (HoSE) as VPB.

The highest forecast pre-tax profit of VND44.36 trillion ($1.89 billion) belongs to Vietcombank, up 18.2% year-on-year; followed by Techcombank with VND28.94 trillion ($1.23 billion), up 6.4%; and BIDV with VND28.19 trillion ($1.2 billion), up 21.6%.

Vietcombank (HoSE: VCB) and (HoSE: BID) are “Big 4” banks, with state as majority shareholder, while Techcombank (HoSE: TCB) is a leading private bank.

The figure for Sacombank (HoSE: STB) is 82.6%. The remaining nine banks are forecast to post pre-tax profit hikes of between 10.6% and 21.6%.

SSI added growth in pre-tax profits at state-controlled banks could reach 18.4%, higher than the 10.8% projected for private banks, thanks to better net interest margin (NIM) potential and lower ratios of lending for the real-estate market and corporate bonds.

In their latest reports, Maybank Securities and VNDirect, two leading brokers in the country, anticipated similar profit growth for the banking sector this year.

Maybank Securities predicted an increase of 13% this year, lower than the 35% posted in 2022 and 32% in 2021, amid tightened capital, tough real estate market conditions, and interest rate hikes.

VNDirect forecasts profit growth of 10-11% in 2023-2024, a deceleration from 32% in 2022, due to the shrinking NIM and higher cost of credit.

Credit growth this year is set at 14-15%, subject to adjustments according to actual developments, the State Bank of Vietnam (SBV) said in a directive on goals for the banking sector in 2023. Vietnam’s credit growth reached 14.5% in 2022, according to the SBV.

The country's 2022 inflation was reined in at 3.15% compared with 2021's average, lower than the target of 4%. This was a very significant result, given that 2022 inflation was estimated at about 5.7% in developed countries and 8.7% in developing and emerging economies.