Want to be in the loop?
subscribe to
our notification
Business News
LOW CREDIT GROWTH, REDUCING PROFIT PUT PRESSURE ON BANK PROSPECTS IN 2023
The outlook for the banking industry this year will not be as bright as previous years due to low credit growth and reducing profit, experts forecast.
In a recent report, VPBank Securities Company (VPBankS) forecast that pre-tax profits of the entire banking industry will slow in 2023 with a growth rate of about 10-12 per cent.
According to the experts, there will be a significant difference in profit prospects among groups of banks. In which, the group of small-sized banks may experience a sharp decline in profit growth in 2023. In fact, this slowdown is also reflected in the banks’ 2023 business plans. Most of them set a profit growth target of only 10-15 per cent in 2023, much lower than the growth rate of 32-35 per cent in the 2021-22 period.
Under the report, the experts forecast credit growth of the entire banking industry in 2023 will be at 12-14 per cent.
In the first half of 2023, credit growth of the industry was lower than the same period last year due to high lending interest rates. The experts expect in the second half of the year, the move from the State Bank of Vietnam will help lower lending rates and improve credit growth of the industry.
The experts said net interest margin (NIM) of all banks, except Sacombank, declined in the first half of 2023 due to high cost of fund (COF) and reducing current account savings account (CASA). However, the experts forecast NIM will improve in the third and fourth quarters of 2023 thanks to supportive policies from the Government.
The report also showed banks’ bad debt in the first half of 2023 increased due to the freezing of the real estate market and the poor financial health of corporate and individual borrowers under a high interest rate context.
Bad debts of most listed banks increased sharply in the first half of the year while the loan loss reserve (LLR) decreased from 143 per cent to 99.4 per cent.
Experts believe the profit growth prospects of listed banks depend greatly on asset quality control.
With the expectation that the macroeconomic situation will start to get brighter in the last quarter of 2023, the experts believe that the bad debt of the whole banking industry in the third quarter of 2023 will be equivalent to the second quarter and will have an improvement in the fourth quarter of this year.
With the Government’s policy support, including the issuance of Circular 02, the bad debt rising pressure will be postponed until the end of the first half of 2024 to give both banks and borrowers time to restructure and gradually handle the debts, according to the experts.
Source: VNS
Related News
![Card image cap](/uploads/news/Eco4.jpg)
GDP GROWTH REACHES 6.42 PC IN FIRST HALF
Vietnam's economy grew by 6.42 pc in the first six months of 2024, slightly lower than the figure of 6.58 pc in the same time of 2022 within the 2020-2024 period.
![Card image cap](/uploads/news/FDI.jpg)
FDI INFLOW INTO VIETNAM REACHES NEARLY 15.2 BILLION USD
Vietnam attracted nearly 15.2 billion USD in foreign direct investment (FDI) in the first six months of this year, a year-on-year increase of 13.1 per cent, according to the General Statistics Office.
![Card image cap](/uploads/news/Eco3%20%281%29.jpg)
CAPITAL FLOWS STRONGLY INTO INDUSTRIAL REAL ESTATE
Industrial real estate has had easier access to bank credit since July, when the State Bank of Vietnam (SBV) reduced the credit risk coefficient for industrial real estate from 200 per cent to 160 per cent, encouraging commercial banks to lend to more projects in the segment.
![Card image cap](/uploads/news/Eco8.jpg)
SPECIAL POLICIES PROPOSED TO DEVELOP THE SEMICONDUCTOR INDUSTRY
The draft law has proposed a number of outstanding policies to promote the development of the digital technology industry, develop the brand of Việt Nam's digital technology industry and develop domestic and foreign markets, as well as investing, purchasing and selecting suppliers of digital technology products and services using State budget capital.
![Card image cap](/uploads/news/FDI3%20%281%29.jpg)
CONGLOMERATES AID FOREIGN MANUFACTURING INVESTMENT
The manufacturing and processing sector is attracting major investment from abroad, thanks to the expansion of key conglomerates, especially from South Korea. With total revenues of about $16.2 billion and profit of $400 million last year, Hyosung Group, which works in textiles and garments, industrial materials, IT, construction, and chemicals, has expressed its plan to expand operations in Vietnam.
![Card image cap](/uploads/news/CN40.jpg)
ESTABLISHING NATIONAL COMPREHENSIVE DATABASE FOR DIGITAL TRANSFORMATION
Vietnam's Ministry of Public Security is drafting the data law project to unify, synchronize and effectively use data for administration and social economic development, for digital government development and for administrative procedure reform.