Lenders in Vietnam now in low-rate lending race: ACB exec

The biggest “headache” for banks in Vietnam now is that profit margins are getting thinner, said CEO of Asia Commercial Bank (ACB) Tu Tien Phat.

The press often reports that a bank earns around VND20-30 trillion ($758.97 million - $1.14 billion) per year - a very large number - but relative to the bank’ total assets, it is actually quite small, Phat told the recent Business Forum hosted by Forbes Vietnam.

Large banks are now offering very low lending rates, forcing others like ACB to follow suit, which further squeezes profit margins, he explained.

“This creates a vicious cycle - when margins shrink, businesses are compelled to expand markets, segments, and customer bases, which in turn means taking on higher levels of risk. Without a calm approach, risk management can face serious challenges,” Phat said.

Another pressure, according to Phat, lies with technology investment. The CEO said digital transformation requires technology change and investment. However, improper investment would become a future “legacy” - a heavy burden for companies, particularly small and medium-sized enterprises (SMEs).

At ACB, Phat emphasized, every step of digital investment and transformation has been undertaken with great caution.

Digital transformation is an extremely complex story that goes beyond just technology, he said, pointing out the “digital transformation trap” that affects both large firms and SMEs alike.

Some companies have invested several million dollars in CRM (customer relationship management) systems, believing they would boost sales and customer relations.

In reality, the CEO said, employees often just go through the motions, entering so-called “garbage” data into the system, while the company still pays around $20-30 per user per month for the software.

Another example cited by Phat concerns automation in processes that businesses often refer to as “process bottlenecks.”

He said companies implement technology to drive automation, but customers complain about a poor experience because the entire process and procedures were not carefully reviewed before the application.

Given this, the CEO stressed that digital transformation should start with processes and procedures, followed by technology.

“For us, we invest over VND1 trillion ($37.94 million) annually in digital transformation and IT. Over the past five years, ACB’s total assets and credit volume have roughly doubled, and profits have risen 2.5 times, while staff numbers have grown only 0.1 times - or 10%.”

“ACB currently has around 14,000 employees and 6-7 million customers. Every day, hundreds of bots automatically carry out almost all tasks. This is the clearest demonstration of the effectiveness of digital transformation,” he said.

The CEO summed up that digital transformation is essential. However, it must be driven by people, not by technology. Digital transformation is mandatory, but organizations should avoid falling into the digital or technology “trap.”

He highlighted three critical factors. First, CEOs and senior executives in banking and business must actively steer the process. Second, those driving digital transformation and technology adoption need a deep understanding of the business. Third, alignment across all staff is essential to ensure processes operate as intended.

“ACB has been undergoing digital transformation for more than 10 years, accelerating over the past five with substantial investment. The results, however, have been well worth it,” Phat said.

ACB’s consolidated H1/2025 report showed Q2 pre-tax profit of VND6.1 trillion ($231.58 million), up 33% quarter-on-quarter, ranking third among private banks in Vietnam that have released Q2 results, behind Techcombank and VPBank.

Cumulative H1 pre-tax profit reached VND10.7 trillion ($406.21 million), achieving 46% of the full-year target.

Credit growth stood at roughly 9% by the end of Q2, below the system average of 9.9%, reflecting a cautious lending strategy.