Leading banks in Vietnam have reported strong financial performances in the third quarter of 2024, signaling confidence in meeting their annual profit targets. State-owned banks like Vietcombank, BIDV, and VietinBank, alongside prominent private institutions such as Techcombank, HDBank, VPBank, and Military Bank (MB), have showcased significant year-on-year profit growth, driven primarily by credit-related activities.
State-Owned Banks Lead with Impressive Profit Increases
State-owned banks continue to dominate Vietnam’s banking sector with substantial profit gains this quarter. Vietcombank, one of the country’s foremost financial institutions, reported a pre-tax profit of over $445 million for Q3, marking an 18 percent increase compared to the same period last year. For the first nine months of 2024, Vietcombank’s cumulative pre-tax profit surpassed $1.3 billion, reflecting a 7 percent year-on-year growth.
BIDV, another key player in the state banking sector, posted a pre-tax profit of $270.7 million in Q3, a 10 percent rise from the previous year. Over the nine-month period, BIDV’s total pre-tax profit reached $918.6 million, up by 12 percent year-over-year. VietinBank also delivered a robust performance, recording $273 million in pre-tax profit for Q3, an impressive 35 percent increase year-on-year, and elevating its nine-month consolidated pre-tax profit to $813 million, up 12 percent from last year.
These strong performances underscore the resilience of state-owned banks in navigating economic challenges and leveraging strategic credit growth to drive profitability.
Table: Q3 and Nine-Month Pre-Tax Profit Growth of State-Owned Banks
| Bank | Q3 Pre-Tax Profit ($ Million) | Q3 Growth (%) | Nine-Month Pre-Tax Profit ($ Million) | Nine-Month Growth (%) |
|---|---|---|---|---|
| Vietcombank | 445 | +18 | 1,300 | +7 |
| BIDV | 270.7 | +10 | 918.6 | +12 |
| VietinBank | 273 | +35 | 813 | +12 |
Private Banks Surge Ahead with Remarkable Profit Margins
Private banks in Vietnam are not far behind, showcasing exceptional growth in their pre-tax profits. Techcombank, a leading private bank, reported a nine-month pre-tax profit of $950 million, reflecting a staggering 33.5 percent increase compared to the same period last year. This significant jump highlights Techcombank’s effective strategies in expanding its credit portfolio and enhancing operational efficiencies.
HDBank, another prominent private lender, posted a pre-tax profit of $527.3 million during the nine-month period, marking a 46.6 percent year-on-year increase and achieving approximately 80 percent of its annual profit target. VPBank, known for its tech-savvy approach, soared to a consolidated nine-month pre-tax profit of $577.5 million, an impressive 67 percent growth year-over-year.
Military Bank (MB) also reported a solid performance, with a Q3 pre-tax profit of $304.5 million, showing a slight increase from the previous year. Its nine-month cumulative profit stood at $864 million, up by 4 percent, completing about 74 percent of its full-year target.
Key Highlights of Private Banks’ Performance:
- Techcombank: $950 million in nine-month pre-tax profit, +33.5% YoY
- HDBank: $527.3 million in nine-month pre-tax profit, +46.6% YoY
- VPBank: $577.5 million in nine-month pre-tax profit, +67% YoY
- Military Bank: $304.5 million in Q3 pre-tax profit, +4% YoY; $864 million nine-month profit, +4% YoY
These robust figures from private banks reflect their strategic focus on credit growth and customer acquisition, positioning them well to achieve their profit targets for the year.
Credit-Driven Growth Signals Stability and Confidence
The impressive profit margins across both state-owned and private banks are largely attributed to credit-related activities. Increased lending to various sectors, including real estate, manufacturing, and consumer finance, has been a key driver of revenue growth. This focus on credit expansion not only boosts profitability but also indicates a stable and confident economic outlook.
However, the banking sector continues to navigate challenges such as managing non-performing loans (NPLs) and maintaining asset quality. Despite these hurdles, the overall credit growth objectives remain clear, with banks adopting prudent lending practices to sustain their financial health.
Factors Contributing to Credit-Driven Growth:
- Robust Loan Demand: Increased borrowing from businesses and individuals seeking financing for expansion and consumption.
- Effective Risk Management: Enhanced credit assessment frameworks reducing the incidence of NPLs.
- Diverse Credit Portfolios: Expanding into new sectors to mitigate risks and capitalize on growth opportunities.
- Government Support: Regulatory measures and economic policies fostering a conducive environment for credit growth.
The focus on credit-related activities underscores the sector’s resilience and adaptability in fostering economic development while ensuring financial stability.
Future Outlook: Steady Growth Predicted for 2024 and 2025
Looking ahead, the banking sector in Vietnam is poised for continued growth. According to FiinGroup, a leading integrated financial data and information services provider, the net interest margin (NIM) of the banking sector is expected to remain stable by the end of 2024, with any potential decline likely minimal. This stability is crucial for sustaining profitability amid varying economic conditions.
Profit Growth Projections:
- 2024: Pre-tax profit growth projected at 15-17 percent.
- 2025: Pre-tax profit growth expected to rise to 20-24 percent.
These optimistic projections are based on the sector’s strong performance in Q3 and the effective management of credit portfolios. As banks continue to leverage technology and innovative financial products, their ability to adapt to market demands and regulatory changes will further enhance their growth prospects.
Table: Projected Pre-Tax Profit Growth for Vietnamese Banks
| Year | Projected Profit Growth (%) |
|---|---|
| 2024 | 15-17 |
| 2025 | 20-24 |
Data Source: FiinGroup
Challenges and Considerations Moving Forward
While the banking sector shows strong growth, it must remain vigilant against potential risks that could impede progress. Economic uncertainties, fluctuations in interest rates, and evolving regulatory landscapes are factors that banks need to navigate carefully.
Potential Challenges:
- Economic Volatility: Global economic shifts could impact loan demand and repayment capabilities.
- Interest Rate Changes: Adjustments in monetary policy may affect profitability margins.
- Regulatory Compliance: Adapting to new regulations requires continuous investment in compliance frameworks.
- Technological Advancements: Keeping up with fintech innovations is essential to stay competitive.
Addressing these challenges proactively will be essential for maintaining the upward trajectory of the banking sector and ensuring long-term sustainability.
A Promising Path Ahead for Vietnam’s Banking Sector
The third quarter of 2024 has demonstrated the robust performance and resilience of Vietnam’s banking sector, with both state-owned and private banks achieving significant profit growth. Driven by credit-related activities and strategic initiatives, these financial institutions are well-positioned to meet their profit targets and contribute to the country’s economic development.
As the sector looks towards 2025, continued focus on credit expansion, risk management, and technological innovation will be key drivers of sustained growth. With projections indicating steady profit increases, the future remains bright for Vietnam’s banking industry, promising enhanced financial stability and economic prosperity.
