BANK PROFITS EXPECTED TO REMAIN RESILIENT IN Q2

Credit growth remained the primary driver of earnings, with outstanding loans at the banks it tracks expected to increase about 9 per cent by the end of the second quarter, led mainly by corporate lending.

Customers conduct transactions at a VPBank office. — Photo courtesy of the bank

HÀ NỘI — The banking sector is expected to post another quarter of profit growth in the second quarter of 2026, supported by solid credit expansion, although earnings are likely to become increasingly uneven across lenders as pressure on net interest margins and asset quality persists.

A recent report by MB Securities (MBS) showed that profit after tax at the banks under its coverage is forecast to increase by around 15 per cent year-on-year in the second quarter.

For the first six months of 2026, profit is projected to rise about 16 per cent from the same period last year.

MBS said credit growth remained the primary driver of earnings, with outstanding loans at the banks it tracks expected to increase about 9 per cent at the end of the second quarter, led mainly by corporate lending.

Net interest income is forecast to grow 15.7 per cent year-on-year, outpacing the expected 11.3 per cent rise, while income from fees and recoveries from written-off loans are also showing signs of improvement.

However, profitability continues to face headwinds.

The securities firm noted that net interest margins (NIM) remain under pressure in the low-interest-rate environment as funding costs have not declined at the same pace.

At the same time, banks are expected to maintain elevated provisioning levels as non-performing loan (NPL) risks persist, with provisioning expenses projected to rise about 19 per cent from a year earlier.

MBS's outlook is broadly consistent with first-quarter results, when 27 banks reported combined profit before tax of more than VNĐ94 trillion (US$3.6 billion), up 14 per cent year-on-year.

Nevertheless, six lenders posted lower earnings, highlighting the growing divergence within the sector.

SSI Securities also expects the banking industry to maintain double-digit profit growth this year, although stronger-capitalised banks with greater capacity to expand lending are likely to outperform.

Among commercial banks, MBS forecasts VPBank and HDBank to lead second-quarter profit growth, with earnings before tax expected to increase 51.9 per cent and 50.2 per cent, respectively.

The securities firm attributed the outlook to higher credit growth limits granted after the two banks participated in the compulsory transfer of weak lenders.

For the State-owned banking group, MBS expects profit growth to remain in double digits but at a steadier pace.

Profit before tax at Vietcombank is projected to reach about VNĐ12.8 trillion, up 16 per cent year-on-year, while VietinBank is forecast to report approximately VNĐ13.8 trillion in pre-tax profit, an increase of nearly 14 per cent, excluding any extraordinary gain from the potential transfer of the VietinBank Tower project.

BIDV is expected to post nearly VNĐ9.9 trillion in profit before tax, up around 15 per cent, supported by higher income from bad debt recovery and services.

Other lenders, including VIB, Orient Commercial Joint Stock Bank, Techcombank and TPBank, are also forecast to maintain double-digit earnings growth.

In contrast, Asia Commercial Joint Stock Bank (ACB) is expected to deliver broadly flat results due to modest credit expansion and weaker non-interest income, while LPBank, Eximbank and Sacombank are projected to report lower profits.

Sacombank is expected to record the sharpest decline as the bank no longer benefits from sizeable gains from asset disposals recorded a year earlier, while NIM weakens and provisioning costs increase.

Looking beyond lending activities, independent credit rating agency FiinRatings said the banking sector is entering a more selective growth phase after rapid credit expansion in 2025.

It forecasts industry-wide NIM will remain below 3 per cent in 2026 due to higher funding costs and narrowing lending yields.

Analysts said expanding financial ecosystems, increasing fee-based income and improving operational efficiency will play an increasingly important role in sustaining banks' profitability. — BIZHUB/VNS

Source: VNS