FORECAST UPBEAT FOR BANKING INDUSTRY IN 2025

Commercial banks' pre-tax profits in 2025 are forecast to grow by 14.9 per cent year-on-year, while bad debt has peaked and is expected to decrease next year.

In a recent report, ACB Securities Companies (ACBS) analysts said that the net interest margin (NIM) of banks in 2025 will increase by five basis points over 2024.

At the same time, the current account savings account (CASA) ratio will likely improve and support the reduction of banks' capital costs, the report stated.

The ACBS analysts also said that in 2025, credit growth for the entire banking sector will likely be at 15 per cent, equivalent to the target for 2024 and higher than nominal GDP growth of about 10 per cent.

They explained that the real estate market has gradually recovered, while the Government has also been promoting public investment. These factors will help stimulate an increase in credit demand, which will support banks' lending yields in the second half of 2025.

“The economy is forecast to continue to recover in 2025 with the Government's GDP growth target of 6.5 - 7 per cent and striving for 7 - 7.5 per cent. The Government is also determined to boost public investment in 2025 and expects remarkable growth in the 2026 - 2030 period. Meanwhile, the corporate bond channel is not expected to recover soon. The factors therefore will help increase the role of the bank credit channel in the coming time,” the report stated.

Although bad debt increased slightly in two consecutive quarters, ACBS analysts believe there are signs that it seems to have peaked and may improve in 2025. The ratio of overdue debts, including restructured debts, has decreased gradually to 0.23 per cent of the total outstanding loans in the third quarter of 2024, lower than the historical average of about 0.5 per cent per quarter.

Notably, Group 2 debts (debts needing special attention) decreased by eight basis points in Q3 2024 and maintained a downward trend for two consecutive quarters thanks to the recovery of the retail customer group. According to Circular No. 02/2023/TT-NHNN, which allows commercial banks to reschedule the debt repayment period and maintain the debt group for certain sectors, restructured debts have also tended to decrease, accounting for only about 0.8 per cent.

Overall, the bad debt ratio of banks is forecast to decline to 1.5 per cent in 2025 from 1.6 per cent in 2024, the analysts said, adding that banks’ relatively low provision for risky debts in the 2023 - 2024 period will keep the provision pressure high in 2025.

According to the analysts, the banking industry's business results have remained sustainable this year, showing that the industry's resilience is now much better than it was during the 2012 - 2013 financial crisis.

Source: VIR

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