VIS Rating - An Affiliate of Moody's presents our update for Vietnam banks on the 2024 full-year financial performance of Vietnam banks. Here's what you need to know:
☑️ Banks are ending 2024 on a high note, particularly for State-owned banks (SOBs) and large banks. The increasing pace of high-yield mortgages and slower non-performing loans (NPLs) formation in 4Q2024 drove their profits and asset quality improvement. In contrast, credit fundamentals for several small banks remained weak, given higher bad debts and credit costs from their retail and SME borrowers, as well as margin squeeze and liquidity issues amid intensified deposit competition.
“Sector asset risk stabilized in 2024, as NPL formation rates declined for several SOBs and large banks. The sector problem loan ratio decreased slightly by 5 bps year-on-year (yoy) to 2.25% in 2024. Several large banks actively tightened credit underwriting for new consumer loans (e.g., VPB) and experienced lower mortgage delinquencies in 2H2024 (e.g., TCB). Among SOBs, CTG’s NPL formation declined significantly during 2H2024, while BID and VCB reduced NPLs through sizable write-offs.
In contrast, asset quality deteriorated for small banks focusing on retail and SMEs borrowers (e.g., SGB, ABB, BAB), mostly due to mortgage delinquencies.
In 2025, we expect stronger operating conditions will drive the continued decline in sector NPL formation rates” – Nguyen Manh Tung – Associate Analyst, VIS Rating.
Exhibit 1: Among banks deteriorating credit profiles in 2024, most are small banks
Note: Bank credit assessment scores - 2024 vs 2023
Source: VIS Rating
Exhibit 2: Sector asset risks stabilized in 2024 driven by slower NPL formation rate
Note: Sector numbers include 27 listed banks
Source: Bank data, VIS Rating
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