ANTD.VN - Low-interest capital mobilization helps banks reduce capital costs, thereby improving net interest margins. Non-performing loans continue to increase, but the proportion of loans in category 2 is gradually decreasing, indicating that the rate of non-performing loan formation is slowing down.
State-owned banks experienced low credit growth.
VNDirect Securities Company has just announced the business results report for the banking sector in the third quarter of 2023.
Accordingly, by the end of the third quarter of 2023, credit growth across the entire system reached 7.0% compared to the beginning of the year - much lower than the 11.0% in the same period last year, but a significant increase from 4.48% at the end of August 2023.
State-owned banks Vietcombank and BIDV recorded modest credit growth of 1.0% and 1.4% respectively compared to the previous quarter, significantly lower than the average credit growth of 2.4% of the top 25 largest listed banks. According to experts, weak credit growth is a result of weak credit demand due to the economy not yet fully recovering and the low lending risk appetite of these banks.
Meanwhile, some joint-stock commercial banks (JSCBs) witnessed strong credit growth, with a focus on lending to corporate customers. Notable examples include VPBank with a 6.4% increase compared to the previous quarter, VIB with 4.6%, and LPBank with 4.0% year-on-quarter.
VNDirect believes that in the fourth quarter, banks with a large proportion of loans to corporate customers and large credit growth limits (VPBank, MB, HDBank ) will maintain their leading position in credit growth in the industry.
"We maintain our forecast for credit growth at 10% year-on-year for 2023, up from 7.0% at the end of Q3, but still lower than the 14% target set by the State Bank of Vietnam," the report stated.
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Low deposit interest rates help banks reduce their cost of capital. |
Low deposit interest rates help reduce the cost of capital.
According to the data, the total NIM (net interest margin) of 25 listed banks decreased by 47 basis points to 3.32% in the third quarter, with 22 out of 25 banks experiencing a year-on-year decrease in NIM due to the slower rate of increase in lending interest rates compared to the rate of increase in funding costs to support these banks' customers.
Among medium and large-capitalization commercial banks, only Sacombank, VIB, and VietinBank were able to maintain stable or higher Net Interest Margin (NIM) compared to the same period last year. In particular, VIB and VietinBank leveraged interbank lending with a high proportion compared to the same period last year (these banks have had the lowest interbank lending ratio since 2022) in their capital structure to reduce capital costs.
For Sacombank, the absence of pressure from accrued interest has fueled strong NIM growth in 2023.
Meanwhile, the net interest margin (NIM) of banks with a high proportion of corporate bonds, such as VPBank and Techcombank, continued to decline the most.
However, there is a positive sign as the industry's cost of capital decreased by 33 basis points compared to the previous quarter, marking the first quarterly (quarter-on-quarter) decline since the beginning of 2022.
This is mainly due to the low-cost funding sources becoming effective and the CASA ratio increasing (from 18.1% at the end of Q2/2022 to 18.9% at the end of Q3/2023).
“In the fourth quarter, we expect the cost of capital to fall further thanks to low-cost deposits accounting for a higher proportion of banks’ funding sources (deposit interest rates fell significantly by 40-100 basis points across all maturities in the third quarter).”
However, NIM may not improve immediately given the current weak credit demand. We believe that some banks with a high proportion of personal loans and a low proportion of USD deposits will have a better chance of improving NIM compared to other banks,” VNDirect experts predict.
In 2024, VNDirect believes that NIM will likely recover thanks to the return of credit demand along with economic growth.
The formation of bad debt has slowed down.
The non-performing loan (NPL) ratio of the top 25 largest listed banks continued its upward trend, reaching 2.24% at the end of the third quarter, the highest level since 2017. However, the NPL coverage ratio only slightly decreased to 94% at the end of the third quarter, compared to 98% at the end of the second quarter and equal to the level at the end of 2020. This indicates a better buffer of provisions for the industry in recent years.
Furthermore, a positive sign is that the total percentage of Group 2 debt (debt requiring attention) has decreased to 2.3% from 2.5% at the end of Q2, indicating that the formation of bad debt is slowing down.
However, in the context of ongoing economic difficulties, experts predict that provisioning costs will continue to erode bank profits in the coming quarters. Banks with high provisioning buffers (Vietcombank 270%, VietinBank 172%, BIDV 158%) will face less pressure to make provisions compared to other banks.
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