Want to be in the loop?
subscribe to
our notification
Business News
INTEREST RATE CUTS SEEN EATING INTO BANKS’ PROFITS
The chief economist of the Bank for Investment and Development of Vietnam (BIDV), Can Van Luc, has predicted the banking system may earn lower profits in 2023 than in previous years due to falling interest rates, the Vietnam News Agency reported.
The State Bank of Vietnam (SBV) has lowered policy interest rates four times this year, leading to commercial banks cutting deposit and lending rates, as the economy has showed signs of attaining slower growth in the first nine months of the year, Luc was quoted by the news agency as saying.
He added the rate cuts have eroded the profitability of banks.
The BIDV Training and Research Institute has projected GDP would expand a mild 5-5.5% this year, below the National Assembly-approved target of 6.5%.
Banks have grown cautious about lowering deposit rates further for fear that depositors may withdraw cash from banks to find alternative investment avenues.
The net interest margin (NIM) in the banking system has narrowed from 3.3% in 2022 to an estimated 3% this year, resulting in an unfavorable profit outlook for banks.
Luc said that banks are increasingly focusing on digital transformation as a potential area for growth. Cutting-edge technologies like blockchain, artificial intelligence, and big data analytics are gaining traction among financial institutions.
The SBV has estimated bad debt at around 5% of total outstanding loans, up from 4.5% at the end of 2022.
Major banks like VPBank, Techcombank, and SeABank have already reported negative profit growth in the first quarter of this year.
Luc predicted that the banking sector’s profits in all of 2023 may grow at a significantly lower rate than in 2022, at 13-15%. This trend is expected to continue into the next few years.
Source: The Saigon Times
Related News
ESG SERIES MASTERCLASS
Join the ESG Series Masterclass today and be a part of the solution led by our team of industry experts Bao Nguyen, Betty Pallard, Chi Nguyen, Jonathan SOURINTHA - HRK Group - PVA PRO - GPS (iBAG), Markus Klemmer, Paula Fajardo, Sergio Pereira da Silva along with many more to come…
VIETNAM’S GDP TO GROW 5.5% THIS YEAR – WB
This forecast is based on the assumption of a moderate recovery in manufacturing exports in 2024, fueled by rebound growth of 8.5% year-on-year in the fourth quarter of 2023 and 17.2% year-on-year in the first quarter of 2024, reflecting strengthening global demand, said Dorsati Madani, senior country economist at the WB in Vietnam.
FARE REFUND FOR VISA REJECTION
Cathay Pacific will offer full refunds for cases of visa rejection to provide you with the confidence to explore the world with ease. If you are planning to fly to a destination that requires an entry visa, you can now book with greater peace of mind.
MOIT PROPOSES SCHEME TO BOOST RENEWABLE ENERGY PROCUREMENT
The proposed Direct Power Purchase Agreement (DDPA) mechanism, outlined in the draft decree, targets organisations and individuals consuming electricity from the 22kV power grid or higher, with a monthly consumption averaging 500,000kWh. However, residential households are excluded from direct procurement.
REAL ESTATE BONDS PLACE PRESSURE ON ISSUING FIRMS
The ministry’s recent report underscores concerns within Vietnam’s corporate bond market for 2023 and 2024. It emphasizes the critical need to address hindrances to the real estate sector in line with the objectives provided in Government Resolution No. 33/NQ-CP, which aims to stabilize the industry.
FOUR COMMODITIES POST Q1 EXPORT VALUE OF OVER 5 BILLION USD
The total export turnover of agricultural, forestry, and fisheries products in the first three months of 2024 is estimated to reach 13.53 billion USD, an increase of 21.8% compared to the same period of 2023.