Vietnam banking sector’s profit outlook likely rosier in H2
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.
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.
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