The opening ceremony of a Vietcombank branch in the northern province of Phu Tho (Photo: VNA)In 2023, the country's largest commercial banks, including state-ownedAgribank, Vietcombank, Vietinbank and BIDV, reported nearly 25 billion USD inprofit. Despite the positive figure, banks were reported to have scaled back ontheir growth targets this year, citing cautious approaches and higher lossprovisions setup compared to previous years.
Last year, VPBank and Techcombank dropped out of the top banks in terms ofprofit in USD, while state-owned banks dominated compared to the private groupin profit rankings, thanks to a cautious trend in setting up credit lossprovisions in previous years.
Vietcombank topped the chart with a consolidated pre-tax profit of over 41.2trillion VND (1.68 billion USD), a 10% increase year-on-year, followed by BIDVwith a consolidated pre-tax profit of 27.6 trillion VND, a 20% increaseyear-on-year.
However, industry insiders said the core operating income from credit for thetwo banks did not show substantial growth in the past year. For example, in2023, Vietcombank's net interest income, the main source of income, onlyincreased slightly by 0.7% to 53.6 trillion VND despite the credit portfolioexpanding 10.6% compared to the end of 2022.
As a result, a reduction in risk provision costs has been a factor that helpedVietcombank's pre-tax profit continue to grow, despite a 2.2% decrease in netprofit from business operations in 2023 compared to 2022. At BIDV, besidesreducing risk provision costs, non-credit sources such as services, foreignexchange business, and securities trading investment have been driving forcesbehind higher profits compared to the previous year.
Meanwhile, VietinBank has been less affected by credit issues. By the end oflast year, the total outstanding loans reached over 1.5 quadrillion VND, a 15%increase compared to the end of 2022. The bank said positive credit growth fromthe beginning of the year and sustained, steady growth in non-interest incomehelped the bank achieve a profit of 25 trillion VND, a 20% increaseyear-on-year. Agribank also reported a profit of approximately 25 trillion VND,exceeding the yearly planned target by 5-6%.
Among the private banks, MB has been the leader of the pack with a pre-taxprofit of 26.3 trillion, a 16% increase year-on-year with a credit growth rateof 28%, significantly higher than the industry average.
Other top performers included Techcombank and ACB despite minor setbacks thatprevented them from reaching the 1 billion USD profit mark. For example, lastyear Techcombank reported a 10% decrease in profits due to a reduction incredit income while having to increase provisions significantly. The bank ended2023 with a profit of 22.9 trillion VND.
Meanwhile, ACB reported a profit of 20 trillion VND for the first time, thanksto reduced operational costs, growth in credit revenue and profit fromsecurities trading investments.
Banks, however, remained cautious about growth targets as they entered 2024.
In the latest survey by the State Bank of Vietnam (SBV), banks said theyexpected a more favourable business situation for 2024. Pre-tax profits mayrecover more slowly than business conditions.
As a result, Vietcombank aims for a profit of nearly 2 billion USDthis year, a 10% increase compared to 2023, with total assets by the end of theyear expected to increase by more than 8%, credit growth to be over 12%, andbad debt below 1.5%.
BIDV has set out some key indicators, such as managing outstanding creditaccording to the credit limit assigned by the central bank, expecting a 14%increase while leaving profit targets open. Vietinbank has set key businesstargets for this year, including total assets increasing by 5-10%; creditgrowth of 14% and reducing bad debt ratio to below 1.8%.
Meanwhile, MB has set three objectives this year: achieving aprofit target of 30 trillion VND, serving 30 million customers and securing aplace in the country's top 3 banks in terms of service quality and efficiency./.
VNA
