Vietnam banks surviving on credit

The net interest margin (NIM) of Vietnamese banks is lower than that of other regional banks, while financial reports show that the business performance of the banks depends heavily on credit.

vietnam banks surviving on credit hinh 0

Analysts say that NIM in Vietnam has decreased in recent years because banks have  set high deposit interest rates to compete for capital. 

In addition, they cannot raise the lending interest rate because of the monetary policy designed to stimulate the economy. 

Some commercial banks have even eased the lending interest rates in some preferential business fields to support economic growth.

According to Phan Minh Ngoc, a renowned economist, the average NIM of Vietnamese banks was 2.4% at the end of 2016, lower than the 2.5% in 2015 and much lower than the 5.5% of Indonesian banks, 3% of Philippine and 2.9% of Thai banks.

However, banks still live on lending. H1 finance reports show that most banks had net interest income on total income ratio of 75% or more.

The reports of 10 large banks (Vietcombank, VietinBank, BIDV, SHB, MBB, Sacombank, ACB, VIB, VP Bank and Eximbank) show that the net interest income reached VND80.3 trillion in the first half of the year, up by 28.6% over the same period last year.

Though the proportion of net interest income of total income of the banks has decreased from 81% to 79.8%, this is still relatively high.

SHB has the highest proportion in the banking system, 92%. BIDV’s ratio has increased from 75.4% to 83.4%. It has the highest net interest income, over VND14 trillion, among banks which have released H1 finance reports.

Meanwhile, ACB is the bank which has witnessed the biggest changes in income structure with income from non-credit services on rapid rise. 

Its net profit from services increased by 27.5% in the first half of the year, while the net profit from forex trading increased by 26.7%, and from other activities by four times.

The H1 reports of eight commercial banks, including Vietinbank, Vietcombank, BIDV, Sacombank, Eximbank, NCB, ACB and VIB, showed total pre-tax profit of VND16.4 trillion, a 25% growth over the same period last year.

In general, the banks in the surveyed group posted relatively good growth over the same period, except for NCB which saw profit fall by 12%. It was the only bank which reported losses in the second quarter.

In terms of business efficiency per employee, Vietcombank was the leading bank with each employee generating VND87 million in net profit per month.


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