Banks are facing new challenges in 2024

	­­State Bank assigns credit growth target of 15% for banks
	Major banks continue cutting deposit interest rates

Banks expect better growth in 2024 despite still facing many difficulties. Photo: Internet

Growth is more positive

Currently, banks are gradually revealing their business results for the whole year 2023. Among them, with the "big four" group of state-owned commercial banks, despite the difficult economic context, the results are recorded positive.

Vietcombank said it has successfully completed business targets in 2023. Specifically, capital mobilization in market 1 (market between businesses and residents) reached approximately VND 1.41 million billion, an increase of 12.1%. compared to 2022; Outstanding credit debt reached VND 1.27 million billion, an increase of 10.6% compared to the end of 2022. The bad debt ratio according to Circular 11/2021/TT-NHNN is at 0.97%; Risk reserve fund balance according to Circular 11 is VND 34,338 billion, bad debt provision ratio reached 185%. Notably, Vietcombank's pre-tax profit in 2023 increased by 10.2% compared to 2022 and exceeded the plan.

At BIDV, the preliminary business results announced by this bank are consolidated pre-tax profit of over VND 27,400 billion. By the end of 2023, BIDV's total assets reached VND 2.26 million billion, continuing to maintain its position as the joint stock commercial bank with the largest total assets in the system. Capital mobilization reached VND 1.89 million billion, an increase of 16.5%; Outstanding credit debt reached VND 1.75 million billion, an increase of 16.66%. VietinBank and Agribank also recorded positive profits, completing business targets.

For private banks, the revealed results are positive. Sacombank recorded consolidated pre-tax profit estimated to increase by 50% compared to 2022, reaching VND 9,500 billion and completing 100% of the plan set by the general meeting of shareholders. Meanwhile, PVCombank leaders said that in 2023, this bank is expected to complete 129% of the revenue plan and 100% of the pre-tax profit plan... However, there are banks that do not meet the set goals. VIB forecasts that profit for the whole year 2023 will reach VND 8,640 billion, an increase of more than 2% compared to 2022, not reaching the target. Many banks recorded a sharp decline and negative profit growth compared to the same period last year such as: ABBank decreased by 59.6%; Eximbank decreased by 46.5%; VietABank decreased by 25.7%...

According to the results of the survey of business trends in the first quarter of 2024 by the Department of Forecasting and Statistics (State Bank - SBV), it is forecast that the liquidity situation will continue to be abundant in the first quarter of 2024 and the whole year 2024. Credit debt of the banking system is forecast to increase by 4.4% in the first quarter of 2024 and increase by 14.2% in 2024. Therefore, credit institutions expect that the business situation will be more positive from the first quarter of 2024 and the whole year 2024, but pre-tax profit may recover more slowly than the business situation.

In the newly issued directive, the Governor of the State Bank has requested credit management to be in harmony with macroeconomic developments to contribute to promoting economic growth and controlling inflation. Along with that is the drastic and effective implementation of the Project "Restructuring the system of credit institutions associated with handling bad debts in the period 2021-2025", contributing to the development of a system of active credit institutions healthy, quality, effective, public, transparent according to the provisions of law and asymptotically meeting international standards and practices...

Supporting for sustainable development

According to experts, in 2024, the banking industry will face many new difficulties and challenges. These are many outstanding issues and problems related to asset quality, handling bad debts, handling weak banks as well as new regulations on ensuring safety indicators and safety ratios. full capital..., especially must prepare to meet the provisions of the Law on Credit Institutions (amended) that has just been passed with effect from July 1, 2024, except for some effective provisions. enforcement from January 1, 2025.

According to Ms. Pham Thi Hong Yen, Standing Member of the National Assembly Economic Committee, the Law has added regulations on organization of governance, risk management, inspection, internal control... to increase the ability competitiveness and resilience of each bank in the economy. Limiting cross-ownership and manipulation of credit institutions, the Law adjusts regulations on reducing ownership ratios with organizations, individuals and related people (except people's credit funds); Reduce credit limits to allow credit institutions to improve capacity according to the roadmap. On the other hand, financial regulations, financial reports (capital, revenue, expenses, interest receivable...), risk provisions... are also added to ensure competitiveness and suitability of international standards on finance and accounting.

In addition, banks must continue to implement solutions to remove cash flow difficulties for businesses and increase access to credit, so low interest rates are a mandatory factor that must be maintained. Furthermore, Circular 02/2023/TT-NHNN on debt restructuring and debt rescheduling will expire at the end of June 2024, possibly revealing a picture of bad debt and banks facing problems. The pressure to set up provisions for restructured debts or non-restructured bad debts will increase.

With the above challenges, banks expect that regulatory agencies will help remove many legal difficulties and continue to operate monetary policy flexibly and proactively. Mr. Pham Duc An, Chairman of Agribank's Board of Directors, proposed the need to stimulate domestic production and consumption, promote public investment from the beginning of the year, and at the same time remove legal obstacles related to investment and construction projects. build... to promote increased demand for credit capital and support businesses to maintain operations; At the same time, we propose to allow credit institutions to restructure debt and maintain the same debt group for a reasonable period of time to support businesses.

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