VIETNAM, March 5 – 1
Prospects at Vietcombank’s headquarters at 11 Láng Hạ, Hà Nội. Photograph courtesy of VIetcombank
HÀ NỘI — It is too early to inform how the continued Russia-Ukraine battle will have an effect on Việt Nam’s banking sector, mentioned trade consultants.
Nonetheless, the battle virtually definitely will drive oil costs up, disrupt the worldwide provide chain and create inflationary strain. Consequently, corporations will probably be extra hesitant to make investments, shoppers reduce on spending and demand for credit score drops.
Throughout 2021, the banking sector reported VNĐ146 trillion in revenue, or US$6.39 billion, a 33 per cent improve year-on-year, primarily from curiosity and banking charges. The revenue pattern has been mentioned to probably proceed within the close to future however the sector’s profitability isn’t with out dangers.
A big a part of future success is dependent upon the banks’ potential to get well and restructure money owed. Property tied up in dangerous money owed will probably rise as authorities measures to assist companies are set to run out on the finish of June, mentioned Yuanta Securities, a Taiwanese funding financial institution.
“Within the occasion of elevated dangerous money owed, banks, particularly these with already-low mortgage loss provision, should put aside extra provision funds, leading to decrease profitability,” mentioned the agency.
Inflation poses one other danger to profitability. Within the occasion inflation hits 4 per cent this yr, most banks are to face 2-4 per cent decrease profitability, in line with Maybank Kim Eng Securities.
That is, nevertheless, a worst-case state of affairs scenario, the corporations mentioned inflation will probably keep nicely below the 4 per cent mark whereas there should not be a serious surge in rates of interest this yr by the State Financial institution of Vietnam (SBV).
Because the nation has been making an attempt to take care of a restoration path, the SBV has each cause to maintain rates of interest low to assist the financial system. In the meantime, business banks should already make use of quite a few measures to guard and preserve profitability.
The agency forecast an 8 per cent rate of interest for many business banks and barely larger deposit rates of interest at 4.5 per cent (from 4 per cent within the earlier yr), which shouldn’t have an effect on companies and the banking sector in a major method.
In a draft doc to be introduced to shareholders within the subsequent assembly, Vietnam Worldwide Industrial Joint Inventory Financial institution (VIB) mentioned it has set a goal of VNĐ10.5 trillion in pre-tax income, a 31 per cent improve from 2021.
Trần Thu Hương, director of VIB’s retail unit, mentioned the goal was set based mostly on sturdy confidence in a sturdy restoration of the financial system this yr, particularly after the Authorities introduced a big assist package deal for 2022 and 2023.
Equally, Vietnam Maritime Industrial Joint Inventory Financial institution (MSB) has set a goal of VND6.8 trillion in pre-tax income, a 34 per cent improve from the earlier yr.
The financial institution’s technique is to speculate and deal with small and medium-sized companies to spice up profitability, in addition to digital providers to cut back prices, in line with Nguyễn Hoàng Linh, MSB’s director-general.
In the meantime, the “Large 4” – Vietcombank, VietinBank, BIDV và Agribank – have set extra conservative year-on-year profitability targets with Vietcombank at 12 per cent and Vietinbank at 10-20 per cent.
Vietcombank recorded VNĐ27.4 trillion in pre-tax income throughout 2021, a 19 per cent improve year-on-year, making it essentially the most worthwhile financial institution in Việt Nam. — VNS