Vietnam banking sector’s profit outlook likely rosier in H2

By My Ha, Hai Yen
Sun, July 7, 2024 | 1:30 pm GMT+7

The profit prospect of Vietnam’s banking sector could be brighter in the second half of this year on the back of an expected rosier microeconomic environment and credit improvement, said experts.

Vietnamese lenders are facing decreasing asset quality and rising bad debts. Photo courtesy of VietNamNet newspaper.

Vietnamese lenders are facing decreasing asset quality and rising bad debts. Photo courtesy of VietNamNet newspaper.

In the year to end-May, credit growth stood at 2.41%, significantly decreasing from 3.17% recorded in the same period last year, the government said in a regular meeting two months ago.

The weak credit demand hindered the growth of the net interest margin (NIM) in the first quarter of 2024. The overall NIM nosedived by 10 percentage points from Q4/2023 and 40 percentage points from Q1/2023 to 3.4% in Q1 this year.

In addition, local lenders are facing decreasing asset quality and rising bad debts. According to statistics covering 27 listed banks by The Investor, their credit risk provision costs jumped 5.8% year-on-year to VND31.4 trillion ($1.24 billion) as of end-Q1.

However, the total net profits of the banking sector hiked 9.2% year-on-year to VND57.73 trillion ($2.27 billion) in Q1. The three-month period witnessed only one bank incurring losses and 10 others experiencing negative growth.

The top 10 profitable banks dominated 80% of profits combined. State-controlled Vietcombank, listed on the Ho Chi Minh Stock Exchange as VCB, took the lead after posting VND8.58 trillion ($337.57 million) in net profit in Q1, down 4.5% year-on-year.

BIDV (HoSE: BID) and VietinBank (HoSE: CTG), among the four largest commercial banks in Vietnam along with VCB and Agribank (HoSE: AGR), posted a 6.3% and 3.2% year-on-year rise in net profit in the three-month spell, respectively.

MBBank (HoSE: HSX), meanwhile, recorded VND4.53 trillion ($175.31 million) in net profit in Q1, down 11% year-on-year, marking the worst quarterly result since Q4/2022. Its bad debts surged to VND15.2 trillion ($598.02 million), up 55% from the start of this year.

In contrast, private banks saw significant profit results. Techcombank (HoSE: TCB) overtook BIDV, MBBank, and VietinBank to become the second-most profitable bank in Q1, with VND6.22 trillion ($244.76 million) in net profit, up 38% year-on-year.

VPBank (HoSE: VPB) and LPBank (HoSE: LPB) booked VND3.56 trillion ($140.34 million) and VND2.3 trillion ($90.45 million) in net profit, up 41% and 85% year-on-year, respectively.

Commenting on the situation, BIDV Securities Company (HoSE: BSI) stressed the banking sector's key tasks this year, which are to improve net interest margin and asset quality.

BSI ascribes the sector’s NIM contraction to weak credit demand and high bad debt ratios.

Dao Minh Tu, standing Deputy Governor of the State Bank of Vietnam, or the central bank, said that the 2024 Law on Credit Institutions, which took effect on July 1, is expected to encourage credit institutions to exercise their lending rights proactively.

SSI Research evaluated that some improvements in the microeconomic environment and the primary real estate market are expected to help boost liquidity and facilitate the liquidation of mortgage assets.

If real estate recovery and economic growth are positive, the bad debt ratio could stall, and NIM will improve in the second half of 2024, SSI Research anticipates.

Comments (0)
  • Read More
Vietnam private lender LPBank reports $394 mln profit in 10 months

Vietnam private lender LPBank reports $394 mln profit in 10 months

Hanoi-based Loc Phat Vietnam Joint Stock Commercial Bank, or LPBank, logged an after-tax profit of VND10 trillion ($394 million) in the first 10 months of this year, said its leadership at the EGM on Saturday.

Banking - Sun, November 17, 2024 | 3:30 pm GMT+7

Vietnam stock market unlikely to experience further steep declines in next sessions: experts

Vietnam stock market unlikely to experience further steep declines in next sessions: experts

The probability of continued sharp falls in the Vietnamese stock market over the next sessions is relatively low, barring unexpected geopolitical turbulences that could cause significant volatility, according experts.

Finance - Sun, November 17, 2024 | 1:30 pm GMT+7

Taiwan’s Cooler Master gets nod for $125 mln additional investment in northern Vietnam

Taiwan’s Cooler Master gets nod for $125 mln additional investment in northern Vietnam

Taiwan-headquartered Cooler Master, a global computer hardware giant, especially in cooling devices, will invest an additional $125 million in the northern province of Bac Ninh, according to a project report.

Industries - Sun, November 17, 2024 | 10:00 am GMT+7

Vingroup’s hospitality arm Vinpearl becomes public company as part of listing plan

Vingroup’s hospitality arm Vinpearl becomes public company as part of listing plan

Vinpearl JSC, a hospitality subsidiary of conglomerate Vingroup, has completed its registration as a public company, the State Securities Commission of Vietnam (SSC) said on Friday.

Companies - Sun, November 17, 2024 | 9:00 am GMT+7

Construction of $2.3 bln central Vietnam LNG power plant to restart in 2026

Construction of $2.3 bln central Vietnam LNG power plant to restart in 2026

Construction of the 1,500-MW Hai Lang Power Center project in Quang Tri province will restart on January 1, 2026, the project investor has informed local authorities.

Energy - Sun, November 17, 2024 | 8:00 am GMT+7

Vietnam-China partnership to enable export of Kim Long brand cars

Vietnam-China partnership to enable export of Kim Long brand cars

Vietnam’s Kim Long Motor and Futa Group have struck a strategic cooperation agreement with China’s Dongfem Dana that will enable the production and export of cars under the Kim Long brand, executives said Friday.

Companies - Sat, November 16, 2024 | 7:13 pm GMT+7

Northern Vietnam province attracts $124 mln investment from Taiwan firm

Northern Vietnam province attracts $124 mln investment from Taiwan firm

Taiwan-based Nien Made Enterprise Co., Ltd. will invest $124.1 million to make furniture accessories at Phu Ha Industrial Park in the northern province of Phu Tho.

Industries - Sat, November 16, 2024 | 7:01 pm GMT+7

Vietnam’s first LNG-fired power plants to enter commercial operation in Jun-Sept 2025

Vietnam’s first LNG-fired power plants to enter commercial operation in Jun-Sept 2025

Nhon Trach 3 and Nhon Trach 4, Vietnam’s first LNG-to-power plants, will begin commercial operations in June and September 2025, respectively, says project investor PV Power.

Energy - Sat, November 16, 2024 | 3:20 pm GMT+7

Vinhomes spends $276 mln on buying back 162 mln shares, more than half to go

Vinhomes spends $276 mln on buying back 162 mln shares, more than half to go

Vinhomes, the largest housing developer in Vietnam, has spent around VND7 trillion ($275.7 million) on implementing its record buyback plan since kick-starting it on October 23.

Finance - Sat, November 16, 2024 | 1:21 pm GMT+7

Indonesia secures funding for green power infrastructure at COP29

Indonesia secures funding for green power infrastructure at COP29

Indonesia has attracted EUR1.2 billion ($1.26 billion) worth of green funding for the electricity sector from Germany’s Kreditanstalt für Wiederaufbau (KfW) at the 29th UN Climate Change Conference of the Parties (COP29) in Baku, Azerbaijan.

Southeast Asia - Sat, November 16, 2024 | 10:10 am GMT+7

Hanoi-based fledgling firm spends $12.3 mln on buying 17.2 mln shares of lender VIB

Hanoi-based fledgling firm spends $12.3 mln on buying 17.2 mln shares of lender VIB

Hanoi-based Quang Kim Development and Investment JSC acquired 17.2 million shares of Vietnam International Commercial Joint Stock Bank (HoSE: VIB) on Monday.

Banking - Sat, November 16, 2024 | 9:47 am GMT+7

Vietnam can utilize Trump’s policies to enhance position in global supply chains: experts

Vietnam can utilize Trump’s policies to enhance position in global supply chains: experts

Vietnam can take the advantage of protectionist economic policies by Donald Trump, the 47th president of the U.S., to strengthen its position in global supply chains, attract foreign investment, and drive sustainable economic growth, write Dr. Tran Ngoc Mai and Prof. Dr. Doan Ngoc Thang, lecturers at the Banking Academy of Vietnam.

Economy - Sat, November 16, 2024 | 9:30 am GMT+7

Former provincial Party chiefs receive warnings for Thuan An Group-related violations

Former provincial Party chiefs receive warnings for Thuan An Group-related violations

The Politburo, Vietnam’s highest decision-making body, has issued warnings to Nguyen Xuan Ky, former Party chief of Quang Ninh province, and Bui Van Cuong, former Party chief of Dak Lak province, for violations related to Thuan An Group.

Politics - Sat, November 16, 2024 | 9:24 am GMT+7

GenAI set to increase Thai GDP by 6% by 2030

GenAI set to increase Thai GDP by 6% by 2030

Generative artificial intelligence (GenAI) is projected to raise Thailand's GDP by 6% by 2030, with hefty contributions from the trade and manufacturing sectors, according to a joint online survey by SCB X and SCB Economic Intelligence Centre (SCB EIC) of the country.

Southeast Asia - Sat, November 16, 2024 | 9:00 am GMT+7

Thailand prepares for nuclear energy

Thailand prepares for nuclear energy

Thailand’s Energy Regulatory Commission (ERC) will start looking into the legal aspects of a small modular reactor project this month to prepare Thailand for using nuclear energy.

Southeast Asia - Sat, November 16, 2024 | 8:30 am GMT+7

Data is money, big money: Vietnam tech giant FPT

Data is money, big money: Vietnam tech giant FPT

Vietnamese tech giant FPT Corporation views data as a new resource and is determined to convert it into money and an artery of the economy, says its general director Nguyen Van Khoa.

Companies - Sat, November 16, 2024 | 7:18 am GMT+7