A person withdraws cash at an ATM corner in Ho Chi Minh City.
Photo by Shutterstock/Saigoneer. 

Commercial banks could see their pretax profit grow by 22.5 percent this year with rising income from lending and insurance. 

Major state-owned Vietcombank is expected to lead with an after-tax profit of VND28.98 trillion ($1.25 billion), up 24.6 percent year-on-year, according to analysts at SSI Securities Corporation (SSI).

It will be followed by BIDV, Techcombank, VPBank and Miltary Bank, with growth rates between 12.7 and 32.4 percent.

The 22.5 percent growth among commercial banks, roughly the same as last year’s 23 percent estimation, will derive from rising net interest margins, increasing income from fees and bancassurance, or the sale of insurance products via banks, SSI said.

Personal lending, especially at state-owned banks like BIDV, Vietinbank and Vietcombank, will additionally drive growth.

Retail lending accounted for 32.2 percent of total credit among the 12 largest listed banks in 2017, but rose to 40 percent in Q3 last year.

SSI said that credit growth could be up to 13.5 percent this year against a government target of 14 percent.

"This growth rate comes with tightened credit regulations and an expanding corporate bond market with increasing public distribution."

Although credit remains the top money source, companies have been issuing more bonds. Last year, corporate bonds issuance rose by 25 percent to VND280.14 trillion ($12.12 billion), according to SSI data.

Banks meeting the capital adequacy ratio of Basel II, an international business standard, are expected to enjoy higher credit growth, as shown by the average 13.8 percent credit growth of Basel II banks in the first nine months of 2019, proving higher than the industry average of 9.54 percent, it was added.

"We expect this situation to persist in 2020, as banks reaching Basel II standards would receive more credit limit and earn more market share compared to competitors."

Banks accounted for half of the 10 most profitable listed companies in Vietnam in the first nine months last year with pretax profits of VND110 trillion ($4.7 billion).