Credit to drive Vietnam’s bank industry earnings in 2025: broker

The Vietnamese banking industry’s pre-tax profit could grow 18% in 2025 from the pervious year, driven by strong credit expansion, according to the Hanoi-based Vietcombank Securities (VCBS).

In its newly released H2/2025 outlook report, the broker said smaller banks are expected to post the strongest growth, at 35%, fueled by accelerated lending to the real estate sector from a low base and a pickup in bad debt resolution. The group would also see some switchings to higher-standard bourses.

Pre-tax profit at dynamic private banks is projected to rise 20%, while state-owned lenders are expected to see a more modest increase of around 12%.

VCBS believed "dynamic" private banks will benefit from pro-private sector policies and improving asset quality. The group is also expected to see notable developments including IPOs, restructuring efforts, and debt recovery.

Earlier, reports from two other major brokers - Saigon Securities (SSI) and MB Securities (MBS) - projected that bank earnings in Q2/2025 would continue to post double-digit growth, averaging around 14-15% year-on-year.

SSI estimated profit growth of 67% for Sacombank (STB), 38% for VietinBank (CTG), 29% for VPBank (VPB), 26% for HDBank, and 16% for TPBank.

The main drivers include continued credit growth, stable provision costs, and no signs of a surge in bad debt.

Credit surges, NIM tightens

Total outstanding credit across Vietnam’s banking system had reached VND16,730 trillion ($656 billion) in the year to June 18, up 7.14% from end-2024, according to the State Bank of Vietnam (SBV), the central bank.

The growth rate was significantly higher than the figure of 3.87% recorded during the same period last year, according to Nguyen Phi Lan, director of the SBV's forecasting and statistics department.

Among the "Big 4" state-controlled banks - Vietcombank, Agribank, VietinBank, and BIDV, VietinBank recorded the highest credit growth.

To fulfill the government's GDP growth target of at least 8% for 2025, the SBV has set a credit growth target of approximately 16% for this year.

However, intensifying competition and falling lending rates have squeezed the net interest margin (NIM).

Vietcap Securities (VCI) expected consolidated NIM to ease to around 3.25% in 2025, down about 0.17 percentage points from 2024.

Several banks have set ambitious profit targets for 2025. VPBank is aiming for a 26% increase to VND25.27 trillion ($966.59 million), ACB targets VND23 trillion ($879.69 million), up 9.5%, and Techcombank projects VND31.5 trillion ($1.2 billion), a 14.4% gain.

Others including Vietbank, ABBank, PGBank, OCB, VIB, and LPBank have also announced profit growth goals ranging from 10% to 70%.

Analysts said in 2025, the banking sector will remain a bright spot in the financial market, supported by strong credit growth, controlled bad debt, and steady profit gains. However, tightening NIM, intense rate competition, and lingering credit risks remain key concerns.

Banks will need to continue optimizing costs, accelerating digital and technological adoption, diversifying non-interest income streams, and improving asset quality to sustain long-term growth momentum, they noted.

Since the beginning of the year, the central bank has maintained its key policy interest rates, keeping the overall interest rate environment stable. Currently, the average lending rate stands at 6.38% per year, down approximately 0.6 percentage points from the end of 2024.

In 2024, Vietnam's credit growth reached 15.08%, with total credit balance of VND15,616 trillion ($605.3 billion) by the end of the year.

Prime Minister Pham Minh Chinh last Thursday instructed the SBV to urgently consider removing the administrative tool of setting credit growth quotas for individual banks, and shift toward a market-based control mechanism.

He also requested that the central bank ensure a reasonable overall credit growth rate of 16%.