Banks to see slower profit growth in 2023: forecast

Total profit growth in the bank industry is forecast to reach 10% this year, the brokerage said in a report. Last year, growth was nearly 34%, with many banks recording new profit peaks.

Credit growth is set to be 12% this year against 14.5% last year mid-high loan interests and deteriorating borrowers’ financial health, VCBS said.

Credit growth was over 4% by the end of June, against 9.35% in the same period last year, as businesses face a shortage of orders and investment markets are deemed unfavorable.

The net interest margin, which measures the difference between a bank’s interest income and interest expenses, declined from 3.81% at the end of 2022 to 3.68% by the end of March.

"The increasing deposit interest rates have been reflected into net interest margin amid slow credit growth and increasing late debt payment," VCBS said.

It added that the margin might become even narrower in the second quarter. Most banks have not released their second-quarter financial reports.

Bad debts are on the rise. In the first quarter, the bad debt ratio of the banking system increased from 1.6% to 1.9%.

Banks have been having difficulties dealing with bad debts amid a frozen property market, VBC said.