Bank profits improve but there are no expectations

Many banks are forecast to have high profit growth in the first 6 months of 2024. Source: Internet.

Good growth at banks with high credit

Currently, no bank has announced specific business results and profits for the second quarter as well as the first 6 months of 2024. However, according to many forecasts as well as from growth results in cash flow and capital mobilization, credit... then the profit situation of the banking industry will be a picture of differentiation.

According to research by MBS Securities Company, the profit margin (NIM) of the banking industry will continue to be under downward pressure when lending interest rates are forecast to decrease further while deposit interest rates have increased slightly in most banks. bank. Furthermore, credit growth in the second quarter was better than the first quarter but still lower than the same period last year, so in general net interest income has not yet increased strongly. Along with that, non-interest income is still bleak and has not been able to recover as it relies mainly on fee collection and debt settlement. Foreign exchange and stock trading activities are not expected to have high growth rates as the market situation becomes increasingly difficult. Provisioning costs will continue to increase when bad debt shows signs of increasing again in the second quarter.

From the above analysis, MBS commented that the after-tax profit of banks will not have a high growth rate, with a prominent increase in some banks with good credit growth such as LPBank, VPBank, HDBank; Some banks recorded negative growth in profit after tax due to high profit after tax in the same period last year such as Sacombank and BIDV.

Similarly, SSI Securities Company also estimates that many banks are forecast to have positive profit growth, some banks even recorded a profit increase of up to 60% compared to the same period last year, but there are also banks that record a profit increase of up to 60% over the same period last year. Banks only grew at a single-digit level, while two banks were assessed to have reduced profits in the second quarter of 2024.

According to the survey investigating business trends in the third quarter of 2024 of the Department of Forecasting and Statistics (State Bank - SBV), credit institutions evaluate customers' need to use banking services (need to deposit money), use of payment services, cards and payment demand) only recovered slightly in the second quarter of 2024, much lower than expectations.

Furthermore, credit institutions said that the ratio of bad debt to outstanding credit continued to show a "slight increase" in the second quarter of 2024, not reaching the expectation of a "slight decrease" like the results in the first quarter of 2024. 2024. Therefore, commenting on the overall business situation and pre-tax profit of the banking system in the second quarter of 2024, credit institutions believe that there has been improvement but not really clear compared to the first quarter of 2024 and has not reached as expected by credit institutions in the previous survey.

Expect improvement in the third quarter and the whole of 2024

Credit in the first 6 months of the year increased by 6%. According to experts, improved credit is a factor that boosts the profits of the banking industry. The survey results also show that 70-75.5% of credit institutions expect the business situation to be better in the third quarter of 2024 and the whole year 2024. In 2024, 86.2% of credit institutions expect profit before tax positive growth compared to 2023, besides, there are still 11% of credit institutions worried about negative profit growth in 2024 (higher than the rate of 10.1% of credit institutions expected in the previous survey) and 2.8% Profit estimates remained unchanged.

In addition, credit institutions assess that internal factors such as interest rate policies, credit, exchange rates and customer care services have a positive impact on the business situation in the second quarter and expected for the whole year 2024. However, there are still 5.6% of credit institutions concerned about business decline due to factors of financial capacity, creativity, product improvement... But it is expected that for the whole year 2024, credit policy, Interest rates and exchange rates of the State Bank are expected to be the most important objective factors that help improve the business situation of credit institutions, followed by the factors of business and financial conditions of customers.

In addition to paying attention to revenue and profit results, according to experts, the banking industry needs to aim for sustainable development by accelerating the restructuring of credit institutions, including the need to thoroughly handle the issue of cross-ownership. in joint stock commercial banks and backyard enterprises of members of the commercial bank's Board of Directors. Management agencies also need to request commercial banks to stop lending to businesses and backyard projects of the group. Along with that, it is necessary to accelerate the equitization process of Agribank, arrange for 3 commercial banks to buy back 0 VND and a number of other weak commercial banks.

Experts also suggest the need to strictly direct increases in charter capital and safety ratios of credit institutions; There needs to be effective and synchronous measures to drastically handle bad debts. Credit institutions need to promote the improvement of executive management capacity and risk management capacity...