Banks are cautious about profit target

VCN - In the second half of the year, the fact that the State Bank of Vietnam (SBV) continuously cut operating interest rates at the end of the second quarter of 2023 has helped banks' capital costs to be reduced sharply, credit growth has also increased, thereby affecting banks' capital costs affect the profitability of the banking industry.
Vietnam Report announces Top 10 prestigious banks Vietnam Report announces Top 10 prestigious banks
The “big banks” continuously reduce lending interest rates, pushing up credit demand The “big banks” continuously reduce lending interest rates, pushing up credit demand
The State Treasury expands budget collection coordination, creating the most favorable conditions for businesses and people The State Treasury expands budget collection coordination, creating the most favorable conditions for businesses and people
The bank still has many opportunities for growth in the second half of the year. Image
The bank still has many opportunities for growth in the second half of the year. Image

Optimistic

According to the survey results on business trends of credit institutions in the third quarter of 2023 by the Department of Forecasting and Statistics (SBV), the business situation of the banking system in the second quarter of 2023 continued to "improve". significantly slower than the previous quarter, pre-tax profit grew slightly but lower than expected in the previous survey period. Therefore, credit institutions have significantly narrowed their expectations of business and profit in the coming time. In addition, credit institutions expect that the credit balance of the banking system will increase by 4.4% in the third quarter of 2023 and increase by 12.5% in 2023, adjusted down by 0.6 percentage points compared to that of the third quarter of 2023. forecast level of 13.7% in the previous survey period.

In the outlook report for the second half of 2023, experts at Bao Viet Securities Company (BVSC) said that the State Bank has reduced the operating interest rate four times and the deposit interest rate has also decreased rapidly from the peak of the first half of the year. in 2023. This helps banks' profit margins (NIM) stabilize in the second quarter and may increase slightly in the second half of 2023. The downward pressure on asset quality is ongoing, but This force will be reduced somewhat thanks to Circular 02/TT-NHNN of the SBV allowing loan restructuring. Along with that, interest rates are cooling down and if the economy recovers from the second half of the year, the bank's asset quality will stabilize and begin to recover.

From the above analysis, BVSC forecasts that the profit of the banking industry (estimated based on the group of banking stocks analyzed by BVSC) will grow by about 7% in 2023 and grow by about 17.6% in 2024. based on the expectation of economic recovery.

Mr. Tran Hoai Phuong, Director of Corporate Banking Division, HDBank said that the current difficulties can be seen clearly such as the risk of bad debt increases, businesses may not be able to survive with their cash flow, some export companies do not receive orders like before... However, most difficulties have started to pass, and hopefully the remaining two quarters will be more optimistic.

According to Ms. Pham Lien Ha, Research Director of the financial services industry, Ho Chi Minh City Securities Corporation (HSC), the biggest opportunity for the banking industry in the second half of the year is interest rates. Interest rates fell relatively quickly in the first six months of the year and especially in the second quarter, thereby helping to reduce the cost of capital, creating conditions for banks to continue to reduce lending interest rates, promoting economic growth as well as promoting economic growth. such as credit growth in the last six months of 2023.

Challenges "Waiting"

Banks are cautious about profit target
Source: Vietnam Report

Previously, at the 2023 annual general meeting of shareholders, many banks had carefully set their business plans for 2023 based on the assessment of the year 2023 with many difficulties and challenges as they had to continue to share resources. , shared difficulties with businesses in the context of slowing global economic growth, along with problems related to interest rates, bad debts, risk provisioning, etc., and difficulties from the real estate market, bonds…

According to a survey by Vietnam Report, 71.4% of surveyed banks expect to increase provisioning in 2023. In addition, a decrease in global trade affects the outlook for domestic economic growth in 2023, leading to a decrease in credit demand; investment, consumption, and international tourism all weakened. In a low-growth environment, businesses and individuals have a lower propensity to borrow and invest, reducing the credit and other financial products offered by banks. Deteriorating economic conditions cause businesses to face financial difficulties, leading to higher default rates, increasing the risk of default on loans to banks. At the same time, these factors can adversely affect the value of collateral held by banks, such as real estate or stocks, leading to deterioration in asset quality, capital buffers, and term limits lending capacity.

Vietnam Report also assessed that the downturn of the stock market, real estate, and bonds and the impact of the bancassurance crisis (cross-selling of insurance through banks) made many banks worried that it would directly affect the economy. bank's business from the perspective of asset quality risk and confidence erosion. The emergence of Fintech companies with fierce competition, challenging the market dominance of banks and increasing pressure to increase charter capital in order to improve capital adequacy ratios and ranking position of banks. Banks are also listed as challenges that banks need to face in the coming time.

By Huongdiu/Quynhlan

Related News

Businesses need support from vietnamese representative offices abroad

Businesses need support from vietnamese representative offices abroad

VCN - Several heads of Vietnamese representative offices abroad believe that Vietnamese businesses need to prepare solutions to respond to the changing global economy and meet the increasing demands of the international market.
What do businesses need for digital transformation?

What do businesses need for digital transformation?

VCN - According to experts, to support businesses in successful digital transformation, the state needs to complete the policy framework and testing mechanism (sandbox) for the development of digital economy, green economy, circular economy and new business models. At the same time, reform institutions to attract investment in digital technology in the direction of maximizing convenience for capital contribution, share purchase, merger and acquisition of digital technology enterprises. Create a favorable environment to promote digital transformation and support business development.
A “picture” of bank profits in the first nine months of 2024

A “picture” of bank profits in the first nine months of 2024

VCN - Pre-tax profits for banks during the first nine months of 2024 remained positive, exceeding 200 trillion VND, solidifying the sector's position as a market leader.

Latest News

Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN – In order to achieve goal of strictly managing public debt and maintaining security and safety of the national financial system in 2025, it is necessary to ensure the borrowings and repayments of public debts is within the approved estimate; closely monitor public debt indicators to ensure that they are within the ceiling and warning thresholds approved by the National Assembly.
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

VCN - On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws. Concluding the session, Vice Chairman of the National Assembly Nguyen Duc Hai emphasized the need for the Government to direct the drafting body and relevant agencies to collaborate closely to finalize a persuasive and widely supported report, ensuring the quality of the draft law for the National Assembly's consideration and decision.

More News

Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

VCN - According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
State-owned securities company trails competitors

State-owned securities company trails competitors

Contrary to the outstanding performances in the banking sector, the securities subsidiaries of major banks have yet to fully leverage their potential, despite numerous inherent advantages.
Strengthening the financial “health” of state-owned enterprises

Strengthening the financial “health” of state-owned enterprises

VCN - The state economy plays a key role in the socio-economic development process, but it is necessary to strengthen the financial health and competitiveness of state-owned enterprises (SOEs).
U.S. Treasury continues to affirm Vietnam does not manipulate currency

U.S. Treasury continues to affirm Vietnam does not manipulate currency

VCN - In its latest report, the U.S. Department of the Treasury has positively assessed Vietnam's monetary policy, reaffirming that Vietnam does not engage in currency manipulation.
Exchange rate fluctuations bring huge profits to many banks

Exchange rate fluctuations bring huge profits to many banks

Net profits from the foreign exchange trading segment of many banks have gained positive results thanks to a strong USD/VNĐ exchange rate fluctuations this year.
Many challenges in restructuring public finance

Many challenges in restructuring public finance

VCN - Restructuring public finance is an important step to improve state financial management, ensure resources are allocated reasonably and effectively, contributing to the country's sustainable development. In addition to the achieved results, the process of accelerating public finance restructuring also faces many pressures.
Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

VCN - E-commerce platforms that declare and pay taxes on behalf of traders not only help to reduce the number of tax declaration points but also reduce the cost of compliance with administrative procedures for the whole society because only one point as the e-commerce trading platform implements tax deduction, payment and declaration on behalf of tens, hundreds of thousands of individuals and business households on the platform.
Disbursement of public investment must be accelerated: Deputy PM

Disbursement of public investment must be accelerated: Deputy PM

Deputy Prime Minister Ho Duc Phoc has called on ministries, agencies, and localities to accelerate the disbursement of public investment from now until the year-end and further tighten investment management.
HCMC: Domestic revenue rises, revenue from import-export activities begins to increase

HCMC: Domestic revenue rises, revenue from import-export activities begins to increase

VCN - The results of State budget revenue in HCMC in the first 10 months of 2024 are estimated to increase by 10% over the same period last year, of which the highlight is that revenue from import-export activities has begun to increase.
Read More

Your care

Latest Most read
Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN - According to the plan for borrowing and repaying public debt and foreign debt of the country in 2025, the total borrowing demand of the Government in the year is expected to be at VND 815,238 billion, an increase of 20.6% compared to the Government'
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws.
Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
Mobile Version