Net interest income (NII) at leading Vietnamese banks rose modestly last year, as lenders cut funding costs and loan demand increased.
The country’s economy expanded by 2.9% in 2020, putting it among the best performers globally while many nations entered recession, the Banker reported.
At VietinBank, NII increased 8.3% year on year to $1.54bn in 2020, while at Vietcombank NII rose 5.3% to $1.57bn, according to The Banker Database. At the Bank for Investment and Development of Vietnam, NII held steady last year at $1.55bn.
Related: Banks reduce lending rate to support clients affected by Covid-19
The previous few years have seen solid growth in NII at Vietnamese banks on the back of the country’s robust economic performance. NII jumped 43% at VietinBank in 2019 and soared by 52% between 2017 and 2019 at the Vietcombank, according to the Banker.
According to S&P Global, credit growth in Vietnam is forecast at between 13% and 14% over the next 12 to 18 months. However, the country’s economic recovery momentum has been stalled somewhat by a recent surge in Covid-19 infections, which has led to stringent lockdowns.
Also read: Covid-19 pushes banks to foster digital transformation
The recent challenges have prompted the authorities to renew calls for banks to cut lending rates this year to aid affected borrowers, which may limit lending spread improvement, according to Fitch.
- Banks unexpectedly cut lending rates to aid businesses
- Banks reduce lending rate to support clients affected by Covid-19
- MB among strongest banks in Asia-Pacific
- Vietcombank profit plunges
- High profits in banks from risky loans
- Banks’ profit forecast to drop significantly in H2 2020
- Banks experience low demand for loans
- Vietnam banks promotes loans with low interest rates by year-end
- Several banks give greenlight to raising credit limits