During the reporting season when commercial banks release their performance figures, it shows the banking industry's profit picture in 2024. As per reports, up to 80 percent of listed commercial banks enjoyed strong profit growth compared to 2023, a record profit in a context where the economy is still difficult and borrowers struggle with high interest rates.

Record profit increase

The financial reports of 27 commercial banks listed on the stock exchange indicate that the total pre-tax profit for 2024 is approximately VND300 trillion (US$11.82 billion) . This reflects an increase of over VND50 trillion compared to 2023, representing a growth of nearly 18 percent.

Of them, six commercial banks have a record high profit, exceeding US$1 billion. Leading are 4 commercial banks belonging to Big 4 including Vietcombank, VietinBank, BIDV and Agribank. Of which Agribank has not been listed.

Vietcombank announced a profit of VND41,279 billion, up 3 percent compared to 2023; VietinBank VND31,800 billion, up nearly 26 percent; BIDV VND30,006 billion, up 12 percent and Agribank about VND27,600 billion, up 9 percent.

Two private commercial banks reported significant profits including MB with VND28,800 billion, reflecting a 9.5 percent increase, and Techcombank with nearly VND27,600 billion, showing a 21 percent rise. 

Additionally, several other commercial banks recorded profits ranging from VND10,000-20,000 billion, including LPB, ACB, VPB, HDB, Sacombank, and TPBank, with growth rates varying from 5 percent to 85 percent . Notably, VPB experienced a remarkable increase of over 85 percent, followed by LPB with 73 percent, HDBank 23 percent, and Sacombank at 30 percent.

Not only large and mid-sized commercial banks, some small commercial banks also had huge profit growth. BVBank saw an increase of more than 400 percent while Eximbank, Nam A Bank, and Kienlongbank enjoyed more than 50 percent rise.

An MB leader attributed the bank's significant profit growth in 2024 to several factors. Strong growth in retail lending was a key contributor. The bank also strategically expanded its short-term lending portfolio to improve capital turnover and manage risk effectively. Furthermore, increased fee income and adherence to State Bank requirements played a role in the improved financial performance.

Additionally, revenue from non-credit activities saw an 18 percent rise, totaling VND3,000 billion, which has bolstered the bank's diverse income streams. Likewise, LPBank, which has achieved a profit growth rate exceeding 70 percent, has officially entered the ‘VND10,000 billion profit club’ with a pre-tax profit nearing VND12,200 billion in 2024. Bank leaders noted that alongside a comprehensive digital transformation, the restructured organizational framework has enabled significant cost reductions and remarkable credit growth, with an increase of over 20 percent compared to the same period in 2023.

Common benefits are under consideration

The banking sector is experiencing significant profitability, even as the General Statistics Office reports that in 2024, approximately 100,000 businesses temporarily halted operations, marking a 12.4 percent rise from the previous year. Additionally, over 76,000 companies are in the process of dissolution, reflecting a 16.3 percent increase, while nearly 22,000 businesses have successfully completed dissolution procedures, which is a 20 percent rise.

In contrast, the recovery of the business sector remains sluggish, with the number of newly established enterprises in 2024 declining by nearly 2 percent compared to 2023.

Many individuals and businesses continue to face challenges in the aftermath of the Covid-19 pandemic, yet numerous observers highlight the significant profits being reported by banks as a narrative worth discussing. Despite the banking sector's claims of declining interest rates over recent years, many borrowers, particularly those with existing home loans, have found themselves subjected to elevated interest rates.

A leader of a petroleum company in Ho Chi Minh City informed that after the Covid-19 period in 2021-2022, many petroleum companies were in trouble. By 2023, they were facing a situation where gasoline was discounted at zero, so many businesses fell into a loss-making situation.

He said that small businesses are still facing many difficulties, struggling to rotate capital to do business and maintain operations, but are having to borrow at an annual interest rate of nearly 8 percent. He added that after maturity, banks all require increased collateral to borrow the old limit or threaten to increase interest rates.

While many commercial banks advertise attractive interest rates for new home loans, a significant number of existing homeowners are facing drastically increased payments on their older mortgages. This suggests a disconnect between the advertised rates for new loans and the realities faced by those with pre-existing mortgages, likely due to fluctuating interest rate environments.

Mr. Nguyen Thanh from Go Vap District shared that in 2021, he took out a loan from TPBank to purchase an apartment in District 8, facing an interest rate of 13-14 percent per annum. He revealed that he was financed 70 percent of the apartment's value over a 15-year term. While interest rates have slightly decreased, they remain close to 12 percent per year, which is burdensome for him.

According to Mr. Thanh, the interest rates for home loans should be lowered to a more manageable 8-9 percent.

In 2021, during the Covid-19 pandemic, banks continued to perform robustly, benefiting from elevated interest rates that many viewed as excessive. During the initial meeting of the 7th session of the 15th National Assembly, the Economic Committee urged the Government to provide clarification regarding the substantial profits earned by commercial banks in 2023, particularly in a time which businesses have faced various challenges.

The banking sector has made efforts to clarify its position, yet persuading public opinion of this reality remains a challenge. Economic analysts indicate that while banks operate as businesses and share concerns about potential capital losses from bad debts, many enterprises, particularly small businesses, continue to encounter significant obstacles.