Banks cautious with profit targets

Cautiously build a plan for 2024

The State Bank's survey results show that credit institutions forecast that the demand for banking services will improve more strongly in 2024; in which, the demand for loans will improve more than the demand for deposits and payments. Credit institutions assess that the liquidity situation will continue to be abundant in the first quarter of 2024 and throughout 2024.

The deposit and lending interest rate level is forecast to continue to decrease slightly, with an average expected decrease of 0.3 - 0.4 percentage points in the first quarter of 2024 and a decrease of 0.2 percentage points in the whole year of 2024. The overall risk level of customer groups continues to increase in the first quarter of 2024 compared to the previous quarter, but the growth rate is slowing down, and the bank expects it to decrease in 2024.

The State Bank has announced a credit growth target of 15% for 2024 and allocated it to each bank very early. Based on expectations of a more positive macro environment both domestically and internationally in 2024, analysts believe that the above credit growth target is feasible and does not contain too many risks in the future and in the short term.

According to the survey, credit institutions expect the business situation to be more positive in the first quarter of 2024 and the whole year of 2024, but pre-tax profits may recover more slowly than the business situation. Therefore, banks are still cautious when building plans for 2024, even though many banks achieved billion-dollar profits last year.

For example, in the Big4 banking group, although still growing positively in a difficult year for the economy as well as the banking industry, this year, Vietcombank's preliminary profit target is more than 44,000 billion VND, an increase of 10% compared to 2023. Meanwhile, the remaining three state-owned banks still do not have specific profit targets, mainly focusing on achieving credit growth and controlling bad debt ratio...

Businesses need more sharing about interest rates

Meanwhile, businesses still expect further reductions in interest rates and an extension of Circular 02/2013/TT-NHNN on debt deferral.

At a recent conference on implementing banking tasks in Ho Chi Minh City in 2024, a representative of the Ho Chi Minh City Business Association said that due to the global recession, production and business activities of enterprises, especially small and medium enterprises (SMEs), are very difficult. The decline in consumption in 2023, combined with the pressure of high interest rates, has exhausted businesses.

In addition, businesses also face difficulties in debt repayment pressure and lack of collateral for new loans. With Circular 02 allowing debt extension, postponement, and restructuring, only businesses know and make recommendations to banks, while the rest are very difficult for banks to widely announce to businesses.

In reality, businesses do not dare to borrow capital from banks to boost production and business. Therefore, representatives of the Ho Chi Minh City Business Association have proposed that banks continue to share difficulties with businesses by sacrificing a portion of their profits to further reduce loan interest rates for businesses.

Currently, the interest rate level has decreased compared to the beginning of 2023, but in order to revive the market, businesses need more interest sharing.

Some bank representatives also hope that the State Bank will extend Circular 02 to extend the time, postpone, and extend debt repayment for businesses to have more time and conditions to maintain operations as well as expand production and business activities in difficult contexts.

Source