VNDirect Securities commented that there is a big gap between the banks in top 10 and the remaining banks in terms of network, asset quality and market share. The top banks will gain strong recovery from 2021 thanks to credit growth, high provisioning and high growth rate in service fees.

Vietcombank

Covid-19 has caused credit growth to slow down and caused the NIM (net interest margin) to decrease because of the lending interest rate drop.

VNDirect Securities predicted that bad debts would increase because of the epidemic. However, Vietcombank, which is cautious in providing loans and making provisions, would see bad debts increase more slowly than other banks.

Vietcombank has better financial capability to deal with bad debts. The low risk and the low ratio of loans on mobilized capital can minimize the impact on NIM.

Vietcombank has better financial capability to deal with bad debts. The low risk and the low ratio of loans on mobilized capital can minimize the impact on NIM.

Vietcombank is the creditor of two large state-owned groups – PetroVietnam and Vietnam Airlines. The two giants are facing financial problems, but as they play very important roles in Vietnam’s economy, VNDirect believes that they will be able to restructure the principals and enjoy the interest rate reductions.

Vietcombank would be the fastest recovering bank among the banks it monitirs, because of four reasons.

First, the penetration rate in the retail banking sector is still low, which means that the bank has many opportunities to develop the sector, and thereby, improve NIM.

Second, the irregular income from exclusive insurance policy distribution contracts and the new income from insurance commission would help increase profits.

Third, the bank follows a cautious policy which minimizes the risks for bad debts.

Fourth, its clients, including large corporations, would help recover credit growth.

Asia Commercial Bank

Sixty percent of ACB’s outstanding loans come from individual clients, so ACB would see little pressure on NIM in comparison with other banks. In general, business clients can get better interest rate preferences, while the loans provided to individual clients are small.

The diversification of clients allows ACB to disperse risks, thus reducing the impact of Covid-19 on bad debts. The number of ACB’s outstanding loans to risky business fields such as construction and real estate is low.

Military Bank

VNDirect Securities believes that the Military Bank would see the bad debts and lending costs increasing more rapidly than Vietcombank and ACB because of the consumer finance operation.

However, the outstanding loans in consumer finance were below 4 percent at the end of 2019. Therefore, the bank is believed to have sufficient capability to provision against new bad debts.

Le Ha 

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