Forecast of bank profits in the second quarter of 2024

Banking industry forecast to grow slowly

MBS Securities Company has just released an industry report, including a general forecast for the banking industry as well as a profit forecast for the second quarter of 2024 of 14 typical banks.

According to the MBS analysis team, banking industry profits are forecast to grow at a slower rate of 12% year-on-year. Total market profits could reach a 9.5% year-on-year increase in the second quarter of 2024, supported by a low base level in the same period while production and consumption have a slight recovery.

Net interest margins (NIMs) will continue to be under downward pressure as lending rates are forecast to fall further while deposit rates have increased slightly at most banks.

Credit growth in the second quarter is forecast to be better than in the first quarter but still lower than the same period last year, so in general, net interest income will not be able to increase strongly. Non-interest income is still gloomy and cannot recover when it mainly depends on fee collection and debt settlement.

In addition, foreign exchange trading with securities is forecast to not have high growth when the market situation is increasingly difficult. Provisioning costs will continue to increase when bad debts show signs of increasing again in the second quarter. The increase in the non-performing loan ratio (NPL) and the decrease in the loan loss provision ratio (LLR) are common trends in the whole industry.

Banks' profits will not be high, some banks will have negative growth.

According to MBS's forecast, in general, the after-tax profit of banks will not have a high growth rate, the increase will be prominent in some banks with good credit growth such as LPB, VPB, HDB; some banks will record negative after-tax profit growth due to high after-tax profit in the same period last year such as STB, BID.

The highest profit growth is forecast to belong to LPBank (LPB) with an increase of 146% over the same period, due to the low base in the second quarter of 2023. At the same time, credit growth increased by 12.8% compared to the beginning of the year thanks to continued promotion of lending to corporate customers.

The second largest increase is forecasted for VPBank (VPB), with a forecast credit growth of 11.5% by the end of the second quarter of 2024. Accordingly, the second quarter of 2024 profit is expected to increase by 62% over the same period. The full-year profit is forecast to increase by 78% compared to 2023.

Some other banks are also forecast to have positive growth compared to the same period, such as HDBank (up 38%), Eximbank (up 29%), Techcombank (up 26%),ACB (up 20%), VietinBank (up 8%), Vietcombank (up 4%), TPBank (up 2%) and VIB (up 1%).

On the contrary, some banks are forecast to have negative growth compared to the same period.

For example, BIDV's net profit in the second quarter of 2024 is forecast to decrease by 14% compared to the forecast due to a 25% increase in risk provision costs. NIM has not improved significantly because the bank is still implementing a preferential low-interest lending policy for the entire industry.

Similarly, Sacombank's Q2/2024 net profit is forecast by MBS to decrease by 21% year-on-year.