31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Banking & Finance
Profit of Vietnam banking sector predicted to grow 22.5% in 2020
Ngoc Mai 14:43, 2020/01/20
In 2020, the credit growth is expected to be in range of 13 – 13.5%, down from 13.7% last year.

Pre-tax profit of Vietnam’s banking sector is predicted to expand 22.5% in 2020, slightly lower than a 23% growth rate in 2019, thanks to strong recovery of some banks, higher revenues from bancassurance and fees, according to SSI Research.

 Data: SSI. Chart: Hai Yen. 

Banks that are set to have the strongest profit growth in 2020 include Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Commercial Bank for Investment and Development of Vietnam (BIDV), Vietnam Prosperity Bank (VPBank), Military Bank (MBBank), and Vietnam Technological and Commercial Bank (Techcombank), VnExpress reported.

In 2020, the credit growth is expected to be in range of 13 – 13.5%, down from 13.7% last year. According to SSI, such target growth is suitable in the context of tightening lending procedures and the development of corporate bond market.

Major corporations chose to issue corporate bonds instead of seeking bank loans, while there are a growing number of individual investors buying corporate bonds.

Techcombank Securities (TCBS) issued VND39.5 trillion (US$1.7 billion) in corporate bonds between January and September of 2019, higher than VND37 trillion (US$1.59 billion) in 2018.

SSI added more securities firms, including foreign-owned ones, are expanding this business.

Another driving force for credit growth in 2020 is personal loan, particularly at state-run banks such as BIDV, VietinBank and Vietcombank with the share of retail loans lower than that of privately-run banks.

Among the 12 largest banks in terms of market capitalization, retail loans formed 40% of total loans as of the end of the third quarter in 2019, significantly increasing from 32.2% in 2017 and 35.5% in 2018.

Regarding potential risks, the adoption of Basel II requirements on capital adequacy ratio (CAR) would lead to increases in banks’ expenditures.

The slowdown in credit growth of the banking sector in the first nine months of 2019 was due to modest credit growth rate of small banks and three major state-run banks, including Agribank, VietinBank and BIDV, with combined outstanding loans accounting for 38% of the total in the country’s banking system.

Meanwhile, banks qualified for Basel II recorded average credit growth of 13.8% as of the end of the third quarter in 2019, higher than the 9.54% rate of the banking system.

SSI expected the trend to continues, as banks meeting Basel II requirements would be given larger quotas for credit expansion compared to those that have not qualified, the report suggested.

TAG: Vietnam banking sector credit growth 2020 Techcombank Vietcombank BIDV VPBank Agribank Vietinbank Moody\'s
Other news
12:00, 2023/00/22
Hanoi eyes comprehensive development in 2023: Mayor
In 2023, the city is determined to successfully implement its yearly socio-economic goals and realize part of the 2021-2025 key development tasks.
16:54, 2023/54/18
EU, Germany fund to enhance public financial management in Vietnam
A robust public finance management system will enable Vietnam to achieve its long-term socio-economic growth.
13:56, 2023/56/17
Vietnam proposed 30% cut in land lease in 2023
Last year, a similar cut caused the state to miss out on VND3.5 trillion (US$150 million) in revenues.
14:58, 2023/58/14
Vietnam's foreign reserves to return to US$100-billion mark by year-end
During the first 10 months of 2022, the State Bank of Vietnam (SBV) was forced to sell an estimated 20% of total foreign exchange reserves to stabilize the exchange rate.
11:03, 2023/03/07
Vietnam’s 2023 GDP growth forecast at 7.2%: Standard Chartered
The forecast comes from the country's solid growth of 8% in 2022.
21:25, 2023/25/05
Gold of high interest for Vietnamese investors to combat inflation
As many as 73% of Vietnamese investors still believe in digital assets, despite market turbulence in 2023.