Banking industry growth milestones 2024

The banking industry has achieved many milestones in authentication technology, green credit, digital payments, and deposit interest rate recovery, contributing to promoting economic development over the past year.

The year 2024 marks a period of remarkable development for the banking industry with a series of remarkable milestones. From promoting the application of biometric technology, promoting green credit to making breakthroughs in digital payments and recovering deposit interest rates, the banking industry has made an important contribution to promoting economic growth and improving user experience.

Biometric Campaign

The banking industry has "sprinted" to deploy biometric authentication before the deadline of January 1 this year. From July 1, 2024, Decision 2345 of the Governor of the State Bank will take effect, stipulating that all personal electronic transactions with a value of over VND 10 million or total daily payments exceeding VND 20 million must apply facial biometric authentication.

On October 1, 2024, Circular 18 requires individuals opening bank cards or online e-wallets to perform biometric authentication. Along with that, Circular 50 provides a legal framework to ensure safety and security for online banking services.

The results showed that about 38 million customers have completed biometric registration. After more than three months of implementation, the number of fraud cases decreased by 50%, while the number of accounts receiving money from fraud decreased by more than 70% compared to the average of the first 7 months of 2024. Some banks such as HDBank have actively supported customers to complete biometric authentication with a high recognition rate, contributing to the overall success of the industry.

Users experience the HDBank application on smartphones. Photo: HDBank

Green Credit Growth

2024 marks a step forward in the field of green credit, when pioneering banks issue green bonds to finance environmentally friendly projects. BIDV issued VND3,000 billion in green bonds in September 2024, followed by Vietcombank successfully mobilizing VND2,000 billion in November. Most recently, HDBank issued VND3,000 billion in green bonds in December, attracting strong interest from investors.

These bonds comply with the green bond framework of the International Capital Market Association (ICMA) and the Credit Market Association (LMA), and are highly appreciated by international credit rating agencies such as Moody's. This is a positive signal for Vietnam's sustainable development goals.

Accelerating digital users and digital payments

By September 2024, transactions via the Internet increased by 49.45% in volume and 33.19% in value; transactions via mobile channels increased by 57.93% in volume and 35.54% in value. Payments via QR alone continued to accelerate, doubling both in volume and value, according to the State Bank.

2024 is also the year that Vietnam completes connecting the cross-border payment system via QR code with Thailand, Cambodia, and Laos with the participation of about 18 commercial banks and 3 payment intermediary organizations, according to the National Payment Corporation of Vietnam (Napas).

This year, QR code payment connections are expected to expand to countries such as China, Japan, Korea, Indonesia, Malaysia, the Philippines and Singapore.

Also in 2024, Vietnam will witness the emergence and rapid development of new-generation digital banks. Typically, Vikki Digital Bank (from HDBank) was launched in July 2024 and quickly joined the trend with cross-border payment utilities using QR, foreign currency trading utilities, and many creative, advanced and accessible financial solutions for the community. Vikki also brings digital financial services to remote areas, through a program to support people in communes in the northern provinces affected by storm No. 3 (storm Yagi) in 2024, according to the Government's comprehensive financial strategy. This is also one of the first new-generation digital banks to integrate "one-touch" payment utilities in smart transportation on the entire first metro line of Ho Chi Minh City as soon as it comes into operation from December 22, 2024.

Customers using Vikkigo cards make one-touch payments on the first day of Metro Line 1. Photo: Vikkigo

Deposit interest rates increase again after 2 years of sharp decline

After two years of sharp decline, deposit interest rates began to increase again from April 2024, boosting credit growth. According to State Bank data, by the end of November 2024, credit growth reached 11.9% compared to the end of 2023, and reached 12.5% on December 7.

According to MBS, the average 12-month interest rate of commercial banks reached 5%, 0.14 percentage points higher than at the beginning of the year. The group of state-owned commercial banks maintained 4.7%, 0.26 percentage points lower than at the end of 2023.

The upward trend became more evident since June and occurred widely from July to September, when dozens of banks increased their deposit interest rates each month. Credit growth 2-3 times faster than the growth rate of capital mobilization has prompted banks to increase deposit interest rates, with some banks even exceeding 6% per year.

Customers deposit money at a bank in Hanoi. Photo: Giang Huy

21/29 banks have positive growth

The third quarter 2024 financial reports from 29 banks showed that total pre-tax profit reached more than VND218,000 billion, up 16% over the same period last year. Of which, Vietcombank took the lead with pre-tax profit reaching VND31,533 billion, up 6.7%. In addition, BIDV, MB, VietinBank, ACB, VPBank and HDBank all achieved over VND10,000 billion in profit, contributing 75% of the total profit of the industry.

The above milestones affirm the sustainable and strong development of Vietnam's banking industry in 2024.

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