ANTD.VN - MSVN experts believe that Vietnamese banks will not fall into a bad debt crisis like 10 years ago; and it will only take a maximum of 1.5 years to handle bad debt.
Maybank Investment Bank (MSVN) has just released a Banking industry strategy report, in which MSVN's Research and Analysis department maintains a "Positive" view on Vietnam's Banking industry.
In the report, MSVN assessed that the profits of most Vietnamese banks will slow down significantly due to difficulties in 2023.
Banks are facing difficulties due to slowing credit demand and fee income, as well as pressure on NIM (net interest margin) and provisioning.
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Bank profits will slow down in 2023, still have strong growth momentum |
However, MSVN believes that this is just a slowdown in a year with an unfavorable business environment.
In the 3-4 year cycle, MSVN still sees large room for Vietnamese banks to record strong growth drivers (i.e. credit growth of about 14%, NIM ratio of about 4% and fee income growth of over 20%).
“For asset quality/provisioning risk, we conducted a test model to assess the impact of the real estate crisis on Vietnamese banks.
Our testing shows that even in the “Bad” scenario (with the possibility of 20% of loans to developers and 10% of mortgage loans becoming bad debts), Vietnamese banks will not fall into a crisis like in 2011-2012” – MSVN report said.
According to experts, stronger macroeconomic fundamentals, legal frameworks and lending risk buffers now can help banks avoid credit cost shocks.
“We estimate that if the “Bad” scenario occurs, Vietnamese banks will only need less than 1.5 years to handle it through provisioning, not 5-6 years as before,” MSVN commented.
Based on the analysis of the 2023 plans of the banks and the ability of the management to complete the plan, MSVN estimates that the total profit of 17 listed banks could increase by about 13-15% this year, compared to 32-35% in 2021-2022.
As a result, the average ROE (return on equity) of listed banks could fall to around 18.7% (compared to 20% in 2022).
Opportunity to accumulate bank stocks
According to MSVN, even in an unrealistic scenario where banks are not profitable in 2023 (i.e. banks will use all their profits to handle bad debts under the “Bad” scenario) and only take the book value at the end of 2022 as the basis for calculating P/B, most Vietnamese banks are trading near 10-year lows.
“Therefore, we strongly recommend investors who can have a long-term vision beyond 2023 and look forward to Vietnam's long-term story of upgrading its sovereign credit rating to “Investment Grade” and upgrading its stock market to “Emerging Market” to accumulate Vietnamese bank stocks from now on,” MSVN experts recommended.
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