Banks tend to be cautious about growth plans in 2023
Banks tend to be cautious about growth plans in 2023
Banks are cautious about growth for 2023 when preparing business plans to submit to their annual general meetings of shareholders (AGM) this month.
If last year saw a record high in profit of the banking industry, 2023 seems to be the beginning of a new cycle with a slowdown of growth for the industry.
In a plan submitted to the upcoming AGM, though Vietcombank aims to increase profits by at least 12 per cent compared to the previous year to more than VND41 trillion, the number is low compared to the 2022 result when the bank recorded an accumulated profit of nearly VND37.36 billion, up 35.9 per cent compared to 2021.
NamABank sets a pre-tax profit target of VND2.4 trillion in 2023, an increase of more than 9 per cent compared to the previous year. Meanwhile, in 2022, this bank set a profit target for the whole year to increase by 25 per cent compared to 2021 at VND2.25 trillion and the bank in fact achieved a profit higher than the set target.
VIB targets pre-tax profit in 2023 to reach VND12.2 trillion, up 15.3 per cent over the previous year. The expected profit growth of VIB is equal to just half of 2022.
Eximbank also sets a business plan in 2023 with an estimated pre-tax profit of VND5 trillion, an increase of 35 per cent compared to 2022. In 2022, Eximbank was the bank with the fastest growth in pre-tax profit with VND3.7 trillion, more than 3 times higher than in 2021.
A recent survey by the State Bank of Vietnam also showed commercial banks were more cautious when forecasting their growth this year. According to the survey, only more than half of banks expect their business performance to improve in 2023, but the improvement is lower compared to 2022.
An analysis of SSI Securities Company also forecast the profit growth of banks in 2023 can reach 13.7 per cent, equal to half the growth rate in the 2017-21 period (28 per cent) and higher than the 2014-15 period (11.3 per cent). However, in the negative scenario, the profit growth of banks may reach only about 10 per cent this year, the analysis noted.
Hoang Cong Tuan, chief economist of Military Bank Securities (MBS), said the market will not see banks set a profit growth target of 30-40 per cent this year. Instead of the high rate, just setting a profit growth target of more than 20 per cent this year is already very impressive.
Experts also forecast the banking industry will continue to face difficulties in 2023 in the context of the less positive outlook of the global economy. Viet Nam is increasingly integrating into the world's economy so it is certain the country will suffer more adverse impacts than previously.
Under the gloomy outlook, banks will have to strengthen provisions, which will cause increased capital cost. Meanwhile, potential bad debt risk is high in the context of production and business difficulties. This makes it difficult for banks' profits this year to maintain the high growth rate as in 2022, the experts explained.
