Vietnam banks are confident in business outlook in 2021
Vietnam banks are confident in business outlook in 2021
As the government looks to push for public investment and the central bank keeps a low interest rate environment to aid economic growth, banks are expected to be the first beneficiaries from an economic rebound.
Despite growing uncertainties and challenges that set to prevail this year, major banks in Vietnam, including Vietcombank, Agribank, BIDV or VPBank have set higher growth targets for 2021.
Customers at Vietcombank. Photo: Tram Anh
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General Director of Vietcombank Pham Quan Dung said the state-run bank sets sight on a 12% year-on-year increase in its pre-tax profit in 2021, which would be equivalent to VND25.2 trillion (US$1.1 billion).
Other key business indicators include asset value to expand by 6% against last year, and a 8% increase in the bank’s capital mobilization rate.
Meanwhile, state-owned bank Vietinbank also targets a strong rise in its profit by 10% against last year. As such, this will take the bank’s total assets and capital mobilization rate to expand by corresponding rates of 3% and between 10 and 12%, respectively.
This year, BIDV aims for its assets to grow by 9% and capital mobilization rate by 12-14.8%, while keeping its bad debt ratio below 1.6%.
Agribank has released a positive assessment of its business outlook in 2021 with an increase of 10% in pre-tax profit and credit growth of 8-11%.
A recent survey from the Monetary Forecasting and Statistics Department under the State Bank of Vietnam (SBV) revealed the majority of banks and credit institutions have become more optimistic in 2021, given the country’s positive economic outlook and possibility of the pandemic being contained globally.
The department forecast the capital mobilization rate to rise by 3.5% in the first quarter of this year and 11.9% for the whole year, taking the credit growth to 13% in 2021.
Economist Le Xuan Nghia gave a similar prediction as the country’s improved economic performance could lead the credit growth to 14-15% for this year.
“High credit growth rate will benefit banks,” he said.
“As the government looks to continue pushing for public investment and the SBV keeps a low interest rate environment to ensure speedy economic recovery, banks will be the first beneficial group from an economic rebound,” Mr. Nghia added.
Digital transformation, retail services remain top of banks’ list
In 2021, the common trend for banks will be to streamline operation and shift priority to retail services.
At Vietcombank, profit from non-credit services accounted for 49.8% in the bank’s total revenue in 2020.
“Vietcombank will prioritize restructuring its operation towards greater sustainability, efficiency and productivity in 2021,” said the bank’s senior official in a recent meeting.
In 2020, Vietinbank announced its exclusive 16-year bancassurance partnership with Manulife Financial Corporation, a move Chairman of Board of Directors Le Duc Tho said will help the bank better meet the growing financial and insurance needs of customers. The lender also signed strategic agreement with ride-hailing firm Grab and other partners to expand its range of services in the financial market.
With a contribution of VND2.31 trillion (US$100 million) to the total revenue, up 11.5% year-on-year, MB Bank is expected to further expand its retail services and accelerate the digital transformation process.
MB Bank’s General Director Nguyen Hung stated the move will help the bank to maintain its ranking in Vietnam’s top 5 commercial banks and top 3 in terms of services quality and efficiency.
“MB Bank is taking advantage of its efforts in digitalization as customers are changing their behavior as a result of the Covid-19 pandemic,” said Mr. Hung.
In the final months of 2020, Vietnam’s retail market witnessed a strong rise that subsequently led to high credit growth of an estimated 12% last year.
