How did the four major banks make such huge profits, nearly $5 billion?

State-owned banks still lead, and lending market share is mainly concentrated in the 'Big 4' group. Four banks (including Agribank ) accounted for 45% of the market share.

State-owned banks have a large market share in lending - Photo: QUANG DINH

While banks have not yet released their Q4 2024 financial reports, estimates suggest that the "Big 4" (Vietcombank, Vietinbank, BIDV , Agribank) will continue to set new profit records for 2024.

Speaking to Tuoi Tre Online , the research director of a securities company said that the "Big 4" banks have many advantages in both deposit mobilization and lending.

"The bond market has not recovered, businesses are still dependent on credit, and credit growth remains high despite the difficult economic conditions . Lending interest rates have decreased but not significantly, while deposit interest rates are low and only gradually increase towards the end of the year," this person said.

Four banks account for nearly half of the market share.

Most analytical reports from securities companies assess Vietcombank (VCB), Vietinbank (CTG), BIDV (BID) (excluding Agribank because it is not yet listed)... as banks with a competitive advantage in cost of capital, thereby giving them many opportunities to maintain NIM (net interest) and increase market share in the context of recovering credit demand.

VPBank Securities Analysis Department (VPBanks) stated that state-owned banks still lead, with the majority of lending market share concentrated in these "Big 4" banks. These four banks (including Agribank) account for 45% of the market share.

MBB, VPB, and TCB hold significant market shares; however, the combined lending of these three leading private banks is only approximately equal to that of BIDV alone.

Agribank* (June 30, 2024)	1.59
Vietcombank	1.4
Vietinbank	1.6
MB	1.95
MBBank	0.7
VPBank	0.63
Techcombank	0.62

Data: Consolidated financial statements

At Vietcombank, the bank did not provide figures, only stating that its pre-tax profit in 2024 continued to be the highest in the banking industry and met its assigned target.

With a 5% growth target set at the beginning of last year, Vietcombank's consolidated pre-tax profit is estimated to exceed VND 43,300 billion, while its individual profit could reach VND 42,500 billion. This figure continues to break the record set last year.

According to SSI, VCB's profit increased beyond forecasts due to improved net interest income, better asset quality, and a sharp reduction in loan loss provisions, although these improvements had to offset a nearly 15% decrease in operating income compared to the same period last year.

Meanwhile, BIDV announced that its estimated pre-tax profit for 2024 is 30,006 billion VND (equivalent to over 1.1 billion USD), representing a 12.4% increase compared to the previous year.

With this profit margin, BIDV is the second most profitable bank in the entire system, after Vietcombank. Like its three "siblings," BIDV also has a large market share in lending.

BIDV also boasts the largest asset size in the entire banking industry as of the end of 2023, reaching over 2.3 trillion VND. Of this, the retail segment contributes the largest proportion to BIDV's credit structure, at 44%, according to data from KB Securities Vietnam (KBSV).

Agribank	11
Vietinbank	16.88
Vietcombank	14
MB	15.3
The entire industry	August 15th

Meanwhile, VietinBank revealed that its profits met and exceeded its targets. The figure is estimated at approximately 26,300 billion VND, an increase of 8.7% compared to 2023.

According to an analyst from VPBank, Vietinbank has significant lending potential, consistently ranking among the top four in the market. Its credit structure has shifted positively towards retail and small and medium-sized enterprises (SMEs). The recovery of SMEs, albeit with a cautious sentiment, continues to drive capital demand.

Previously, CTG's retail segment in Q3 2024 experienced exceptional growth of 11.8% year-on-year, 1.7 times faster than the growth of its large corporate client base.

Furthermore, Vietinbank's FDI segment also experienced outstanding growth of 17.8% compared to the beginning of the year, demonstrating the bank's advantage over other banks in FDI credit products and its ability to absorb credit from the FDI wave effectively, according to VPBank experts.

Sharing further insights, Ms. Tran Thi Khanh Hien - Director of Analysis at MB Securities (MBS) - stated that state-owned banks are among the group that manage costs well.

"Over the past year, the banking sector has tended to reduce the opening of branches, transaction offices, and ATMs, while increasing digitalization and online services. In addition, during the period of 2018-2020, many banks had to invest in core banking systems, and the depreciation is almost complete now," Ms. Hien said.

Banking industry forecast for 2025: Increasingly competitive.

According to VPBank's experts, net interest income increased year-on-year due to more positive credit growth and more attractive capital costs (due to low deposit interest rates).

However, looking at the Net Interest Margin (NIM), it's easy to see even fiercer competition in the banking industry, with most banks experiencing a year-on-year decline. "The decrease in NIM is occurring in both state-owned and private sectors, not just the private sector as before," a VPBanks expert observed.

This suggests that the banking sector may be entering a saturation cycle, as interest rates in Vietnam are expected to remain at current levels, making it crucial for banks to diversify their revenue streams beyond interest.

However, non-interest income for most banks decreased last year, except for a few cases that recorded extraordinary income such as LPB and SHB. This is partly due to the fact that the cross-selling market for life insurance has recovered, but not significantly.

Forecasting the banking sector's profits for 2025, ACB Securities (ACBS) analysis team predicts an increase of nearly 15% compared to 2024. However, non-interest income is projected to grow slowly at 8.5% due to the anticipated continued difficulties in cross-selling insurance products.

According to Ms. Hoang Viet Phuong, Director of Analysis and Investment Consulting at SSI, in the early stages of economic recovery, many banks are still struggling to resolve bad debts and find ways to control loans with potential credit risks.

However, SSI experts believe that the recovery of the real estate market in the North will somewhat improve investor sentiment and confidence.

"We expect this trend to gradually spread to the Southern market in the near future. If the real estate market recovers faster than expected and legal issues are resolved in 2025, banks with a high proportion of loans to the real estate sector will benefit," an SSI expert predicted.

Source: https://tuoitre.vn/nho-dau-4-ong-lon-ngan-hang-lai-khung-toi-gan-5-ti-usd-20250115185524366.htm