Statistical data reveals that banks have set ambitious profit before tax (PBT) targets for the year, with projections indicating a minimum 10% increase and some institutions aiming for as high as a 114% surge compared to the previous year. Amidst these optimistic forecasts, will banks' confidence translate into notable success?
First Quarter Results Amidst Varying Projections
In the initial quarter of 2024, SeABank emerged as the first bank to officially unveil positive profit figures, surpassing VND 1,500 billion—an impressive surge of nearly 41% compared to the same period in 2023. Buoyed by this achievement, SeABank expresses robust confidence in its projected profit growth for the remainder of the year, aiming for a target profit before tax of VND 5,888 billion, marking a substantial 28% increase from 2023, as outlined in documents from the 2024 congress.
Meanwhile, during a recent shareholders' meeting, Mr. Đặng Khắc Vỹ, Chairman of VIB, disclosed that the bank recorded a profit of VND 2,600 billion in the first quarter of 2024—a slight decline from the profit of VND 2,694 billion during the same period last year. This decrease is attributed to the Tet holiday period, which resulted in reduced bancassurance activities amidst challenges in the insurance market. However, despite this setback, VIB maintains an optimistic outlook for the year, targeting a 13% growth in earnings before tax (EBT) compared to 2023's earnings of VND 12,045 billion. With the real estate market showing signs of resurgence and additional debt recovery strategies in place, VIB anticipates generating extraordinary income ranging between VND 1,000 to 1,500 billion from resolved risk debts throughout the year.
OCB's audited consolidated financial report for 2023 indicates a projected profit before tax of VND 4,139 billion, marking a 6% decrease compared to 2022. This decline, amounting to VND 1,088 billion from the unaudited report, is primarily attributed to a rise in provision costs totaling VND 501 billion. Nonetheless, OCB remains optimistic, aiming for a substantial 66% increase in earnings before tax (EBT) in 2024, reaching VND 6,885 billion. As of the first quarter of 2024, OCB has achieved a credit growth of approximately 4.6%, a 5% increase in capital mobilization, and profits ranging between VND 1,000 to 1,200 billion.
Additionally, several other banks have unveiled their profit targets for the year. Vietcombank anticipates a 10% profit increase compared to 2023, targeting over VND 44,000 billion. MB aims for a 10% profit growth to VND 28,800 billion. VPBank sets an ambitious goal for consolidated EBT in 2024, aiming for a 114% increase over 2023 to VND 23,165 billion, with the parent bank contributing VND 20,709 billion. Meanwhile, Techcombank expects an 18.4% profit growth to VND 27,100 billion.
LPBank aims for a pre-tax profit target of VND 9,500 billion, reflecting a notable 35% increase compared to 2023. Similarly, NamABank has approved a consolidated pre-tax profit target of VND 4,000 billion, signaling a 21% increase. VietBank presents two business plans for 2024: under the base plan, the target profit before tax is set at VND 950 billion, a 17% increase from 2023, while the striving plan aims for a 29% EBT growth to VND 1,050 billion. Saigonbank projects a pre-tax profit of VND 368 billion for 2024, marking a nearly 11% increase from 2023 results.
Caution Looms Over Bank Profitability
Published profit statistics for 2023 reveal a mixed picture for Vietnamese banks, with the average completion rate of profit before tax (PBT) plans standing at 85% among 27 listed banks. Alarmingly, only 10 out of these 27 banks managed to meet or surpass their profit targets. The overall system registers a meager 3.8% growth in profit before tax compared to the previous year—marking the lowest growth rate in a decade.
This sluggish profitability is attributed to various economic challenges, including weak capital absorption, low credit growth leading to reduced income, escalating capital costs, and a significant surge in industry-wide bad debts. Many banks have reported bad debts several times higher than those recorded at the beginning of the year, necessitating increased provisioning efforts to mitigate risks.
The newly released figures for 2024 paint a picture of optimism among Vietnamese banks, with many expressing confidence in the prospects for the current fiscal year. Even among those joint stock commercial banks that fell short of their targets last year, there is a prevailing sense of determination to rebound in 2024.
For instance, TPBank, which achieved only 64% of its profit before tax (PBT) plan in 2023, with earnings reaching VND 5,589 billion, now sets an ambitious individual target of VND 7,500 billion for PBT in 2024—a remarkable 34% increase over the previous year. Similarly, despite a 27% decline in profit before tax to VND 2,720 billion in 2023, largely attributed to reduced main revenue sources and heightened risk provisions, Eximbank remains resolute in its objectives. The bank has set a robust target of VND 5,180 billion for 2024—a staggering 90.5% increase over last year's results.
ABBank faced significant challenges in 2022 and 2023, with its earnings before tax (EBT) falling short of targets. In 2022, EBT reached only 55% of the plan, amounting to VND 1,686 billion. The following year, EBT plummeted to VND 513 billion, marking a steep 69.6% decline compared to 2022. The bank's board of directors attributed this downturn to various factors, including the need to withdraw interest from matured investment bonds, outstanding accrued interest on loans due to overdue debt, and the necessity to increase credit risk provisions.
However, despite these setbacks, ABBank is now poised for a resurgence. At a recent shareholders' meeting, the bank approved a target profit before tax of VND 1,000 billion for 2024—a bold move representing a remarkable 94.5% increase compared to its 2023 performance. This ambitious target underscores ABBank's determination to rebound and regain its footing in the upcoming fiscal year.
VietABank recently disclosed its 2023 audited consolidated financial report, revealing a profit before tax of VND 916 billion—a decline of 17% compared to 2022. Despite this setback, VietABank remains cautiously optimistic, setting a target to increase its profit before tax by 15% in 2024, aiming for VND 1,058 billion.
However, amidst these projections, uncertainties loom large. The economy, both domestically and internationally, continues to grapple with numerous challenges. Despite lower interest rates, businesses still struggle to absorb credit, with no apparent resolution in sight. In this challenging landscape, the banking sector finds itself tethered to the fate of businesses and the broader economy, necessitating solidarity and resilience in the face of ongoing difficulties.
