Hanoi (VNA)ඣ - Many banks have set high profit ambitions for this year due to rising credit demand and the grand march of continued economic recovery.

Vietnam’s gross domestic product (GDP) in the first quarter of this year increased 5.03% year-on-year, higher than the 4.72 percent growth rate in the same period last year. As of March 21, credit growth had risen by more than 4%, 2.7 times higher than at the same time last year. In the recently published 2021 annual report, the management board of the Military Commercial Joint Stock Bank (MB) said that in 2022, the bank aims to increase total assets by 15% compared to the previous year and charter capital by 19.4%. Notably, it targets 20.3 trillion VND (869 million USD) in pre-tax profit this year, up 23% year-on-year. At the recent meeting of shareholders, the Vietnam International Commercial Joint Stock Bank (VIB) approved a plan with an expected profit of 10.5 trillion VND, an increase of 31% compared to last year. The Tien Phong Commercial Joint Stock Bank (TPBank) has revealed its plan to increase its total assets by 20% compared to the end of 2021 and pre-tax profit of 8.2 trillion VND, up 36% year-on-year. Other banks such as the Orient Commercial Joint Stock Bank (OCB) also set pre-tax profit target of 7.1 trillion VND or 29% year-on-year increase and MSB expects pre-tax profit in 2022 to reach 6.8 trillion, up 30% compared to last year. Some banks even target triple digit profit growth. The Vietnam Export Import Commercial Joint Stock Bank (Eximbank) is an example. The bank has revealed that its 2022 pre-tax profit target will increase 127% compared to the previous year, equivalent to about 2.5 trillion VND. Many experts believe that this poses a challenge for Eximbank when last year its profit declined 10% year-on-year and it didn’t meet the annual profit target of 1.3 trillion VND. Contrary to joint stock banks, state-owned banks are quite cautious when setting profit growth targets this year. The Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) only set a goal of 12% increase in pre-tax profit this year while the Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) also targets 10%-20% growth in individual and consolidated pre-tax profit. According to experts, the fact that state-owned banks are prudent in making their profit plans is understandable as the economy is still facing many risks.

Solutions

To realise the set plans, MB's management board said that it will accelerate digital transformation as well as carry out data initiatives and intelligent risk management. The bank will also increase the operational efficiency of its member companies and the contributing ratio to the company's profit by 2%-3%. MB expects to attract 2.5-3 million new customers while optimising capital mobilisation cost and current account saving accounts (CASA) growth. Similarly, TPBank's leaders also said that special attention will be paid to raising the CASA ratio in order to reduce costs and increase the net profit margin (NIM) to enhance business efficiency and strengthen control and handle bad debts. MSB leaders also said that in 2022, in addition to focusing credit on retail and small and medium-sized enterprises, the bank will continue to promote fee collection, the digitisation of services to contribute to strong growth of CASA, and lower the cost of capital and cost-to-income ratio (CIR). Tran Thi Khanh Hien from the VNDirect Securities Company forecasted that banks that are able to boost credit and non-interest income like bancassurance will have an advantage. According to Hien, banks that lend more to individuals will have higher interest margins given a decrease in the interest rate for output while the interest rate for input tends to increase. Banks with good asset quality will also have many opportunities in 2022. Commenting on the banking industry in 2022, the SSI Securities Company also predicted that the average pre-tax profit of banks will increase by 21% compared to 2021, excluding bancassurance and divestment of subsidiaries./.