ANTD.VN - Pre-tax profits of the entire banking industry may remain flat in 2023, increasing by about 10% in 2024. , some banks will have negative profit growth. Interest rates are expected to continue to decrease by about 1 - 1.5% in 2024.
This assessment was made in a banking industry report recently published by Vietcombank Securities Company (VCBS).
According to VCBS analysts' forecast, in 2024, credit growth will continue to maintain at 12%. Credit growth is still under pressure from the slow recovery of the economy and real estate market, however, interest rates have cooled down to low levels, creating a driving force for loan demand, especially retail credit and small and medium enterprises (SMEs).
Banks’ corporate bond portfolios are expected to remain stable. Net interest margins (NIMs) are expected to remain flat or increase slightly in 2024 as funding costs improve, but lending rates will continue to be under downward pressure as banks compete to attract quality customers.
The potential for NIM expansion belongs to the private customer group with strengths in retail and CASA.
 |
| Some banks may have negative profit growth |
On-balance sheet bad debt and provisioning levels in 2023 remain under control thanks to supportive circulars and policies.
VCBS forecasts that the entire banking industry's profits will slow down and remain flat in 2023, with a divergence in profit prospects among banking groups in 2024 with a growth rate of about 10%, while some small-sized banks will continue to slow down and even experience negative growth.
System-wide credit recorded a growth rate of 9.15% by the end of November 2023, with the potential to increase by 12% in 2023. VCBS assessed that credit demand in general remains weak due to the slow recovery of the economy and real estate market.
Deposit interest rates have decreased rapidly and actual lending interest rates have been recorded to decrease by about 2-2.5% for newly-arrived loans. However, interest rates for existing loans remain high at about 10%/year due to a 3-6 month lag compared to deposit interest rates and a difference in the rate of decrease between industries.
Interest rates are expected to continue to decrease by about 1 - 1.5% in 2024.
The private commercial banking group recorded a sharper decrease in lending interest rates than the state-owned banking group due to the rapid increase in late-payment loans and the reduction of output interest rates to attract customers. It is expected that lending interest rates of this banking group may improve in the near future when customers return to repay their debts.
Bank NIMs are expected to recover from the bottom in Q3/2023 as high-priced deposits are absorbed, while cheap CASA funds increase again. However, there will be differentiation among banks.
Private banking groups with a large base of regular individual customers have seen rapid NIM growth thanks to the recovery in CASA ratio and retail credit as interest rates gradually decrease.
The NIM of the group of 4 state-owned commercial banks remained stable or increased slightly. The level of improvement in NIM of the group of medium and small banks depends on the pressure to reduce interest rates to compete for credit growth, and the speed of recovery of customers' payment ability.
Regarding bad debt, by the end of the third quarter of 2023, the banking system's on-balance sheet bad debt ratio increased to 2.2% from 1.6% at the end of 2022, and the group 2 debt ratio also increased to 2.3% from 1.8% at the end of 2022, but decreased quarterly, which is a positive sign that bad debt has peaked.
According to the State Bank's estimate, by August 2023, the ratio of bad debt on the balance sheet and potential debt of the whole system (including SCB, Dong A, CB, Oceanbank, GPbank) will be at 5.12% and 8%.
The on-balance sheet bad debt ratio and provisioning level are not expected to increase dramatically in 2023 thanks to Decree 08/2023/ND-CP supporting the extension of corporate bonds and Circular 02/2023/TT-NHNN allowing loan restructuring.
Bad debt settlement activities continue to face difficulties due to the sluggish real estate market, Resolution 42 expires on December 31, 2023 while the revised Law on Credit Institutions has not been passed, creating a legal gap for bad debt settlement.
Source link
Comment (0)