Banks’ first-quarter profits show cautious optimism

Banks’ first-quarter profits show cautious optimism

Financial statements released by several banks at their 2025 AGMs point to an encouraging first-quarter performance, though profit growth is expected to encounter significant headwinds.

As of the end of the first quarter (Q1), SHB reported a pre-tax profit of nearly $176 million, achieving 30 per cent of its full-year target. Discussing SHB’s credit growth momentum in Q1, Ngo Thu Ha, CEO of SHB, said, "As of March 31, credit growth reached 7.8 per cent, driven by a strong expansion of strategic clients within its ecosystem, as well as large corporate and small- and medium-sized enterprises (SMEs)."

At VIB, total customer loans reached approximately $13.4 billion, growing by over 3 per cent from the beginning of the year. Credit growth was well-balanced across customer segments, including retail, SMEs, corporate, and financial institutions, with retail loans maintaining a dominant share of nearly 80 per cent, placing VIB among the top banks in the sector.

TPBank released preliminary business results, recording a pre-tax profit of more than $84 million in Q1, up 14.8 per cent on-year. The bank’s total operating income for the quarter reached nearly $180 million. Interest income remained the primary contributor at around $135 million.

Net fee and commission income continued to be a highlight, rising 27 per cent on-year to approximately $36.4 million, pushing the proportion of fee income to over 20 per cent of total operating income, compared to 15 per cent in the same period last year.

Nguyen Hung, CEO of TPBank, said, "The bank’s credit growth drivers came mainly from production and business loans, as well as consumer loans for housing and car purchases. Lending to real estate remains relatively cautious. Overall, TPBank’s lending activities align with its orientation of safe and sustainable growth."

NCB reported positive first-quarter results, with a pre-tax profit estimated at more than $5 million. Key business indicators posted positive growth across the board, with total deposits reaching approximately $4.3 billion, up 6.8 per cent compared to the end of 2024.

Customer loans at NCB were estimated at more than $3.1 billion, an increase of 9.6 per cent, equivalent to a net rise of over $272 million. Particularly, net interest income hit a nine-quarter high, estimated at nearly $20.4 million.

Commenting on these strong results, Ta Kieu Hung, CEO of NCB, said, "These outcomes stem from NCB’s efforts to vigorously expand business activities under its new strategy while simultaneously restructuring the bank in accordance with the restructuring plan approved until the end of the decade."

Regarding Vietcombank’s Q1 performance, Le Quang Vinh, the bank's CEO, spoke about the key indicators that showed strong growth, especially in credit and international trade finance activities. Vietcombank also signed multiple important credit agreements in Q1, supporting its growth targets.

"Fundraising activities maintained stable growth, foreign exchange trading volumes expanded strongly, and profits continued to grow on-year, with non-interest income making a significant contribution to the overall profit structure," said Vinh.

Nguyen Tran Manh Trung, general director of VietinBank, revealed that the bank’s total assets reached approximately $100 billion, up 3.9 per cent year-to-date. Outstanding credit amounted to around $72 billion, up 4.7 per cent, while customer deposits stood at about $92 billion, growing 6 per cent. Standalone pre-tax profit was estimated at $376.7 million, a 19.6 per cent increase on-year.

"It may sound counterintuitive, but VietinBank will be the first among the Big Four state-owned banks to study reducing the number of physical transaction offices. We plan to close several hundred branches and replace them with digital platforms to better serve customers and enhance user experience. This is a key investment focus for VietinBank, and we believe tangible results will be seen in the near future," said Tran Minh Binh, chairman of VietinBank.

Dr. Can Van Luc, chief economist at BIDV, commented that 2025 is expected to be a year of stable growth for the banking sector, although significant risks and challenges remain.

"In the base-case scenario, credit growth is projected at 14-15 per cent, driven by low interest rates and increasing capital demand across key economic sectors. Retail lending and real estate credit, particularly in the business, consumer, and mortgage segments, are showing signs of recovery and are expected to continue expanding. Corporate lending is anticipated to remain stable as businesses maintain expansion plans, despite pressure from new tariff shocks," said Luc.

However, Luc noted that the banking sector’s profit growth in 2025 faces several headwinds. Non-performing loan (NPL) ratios remain elevated, especially in the construction, real estate, commerce, and manufacturing sectors, where repayment capacity is still weak, affecting banks’ debt recovery efforts.

Luc emphasised that export-import businesses are likely to face greater difficulties under the new tariff policies of the current US administration, potentially exacerbating NPL risks.

"Secondly, service income streams that previously contributed significantly to profits – such as foreign exchange trading, bancassurance, and off-balance-sheet debt recovery – are unlikely to rebound quickly. Thirdly, management costs are trending higher, driven by technology investments and rising labour costs, aligned with government roadmaps and intensified competition for talent," he said.

"Lastly, the net interest margin will be difficult to improve, as lending rates are expected to decline slightly under guidance from the government and State Bank, while deposit rates are unlikely to decrease given tight liquidity conditions amid high credit growth targets," added Luc.

VIR