Foreign banks operating in Vietnam have released their 2024 financial reports, with 5 out of 6 reporting lower profits compared to the previous year. Shinhan Bank Vietnam was the only foreign bank to experience profit growth last year, although the increase was modest.

In 2024, Shinhan Bank Vietnam reported pre-tax profits of over 5,770 billion VND, a slight increase of 2% compared to 2023. While outstanding loans increased by nearly 20%, net interest income only saw a marginal 3% rise, and profits from other segments like services and foreign exchange trading were lower year-on-year.

With total assets of nearly 195,000 billion VND, the South Korean bank boasts higher profitability than some larger domestic banks like SeABank, NamABank, Eximbank, and OCB.

Apart from Shinhan Bank, other foreign banks, including HSBC, Woori Bank, Public Bank, Hong Leong, and CIMB, all recorded declining business results in the Vietnamese market last year.

Specifically, HSBC Vietnam's pre-tax profit for the year was 4,450 billion VND, a significant drop of nearly 32% compared to the previous year. Outstanding customer loans grew by less than 5%. Core income from credit activities decreased by over 20%, from 7,965 billion VND to 6,240 billion VND.

Last year, HSBC Vietnam also scaled down its operations, with total assets decreasing by 17%, from over 164,000 billion VND to 136,400 billion VND. Deposits at other credit institutions fell from over 73,300 billion VND to 41,900 billion VND. On the other side of the balance sheet, customer deposits at the bank decreased sharply by 16% to 114,139 billion VND.

Similarly, at other banks like Woori, Public Bank, Hong Leong, and CIMB Vietnam, income from credit activities increased at a lower rate than interest expenses. Consequently, net interest income decreased compared to the same period, leading to poorer business results than in 2023.

Woori's profit dropped by over 8% to 1,379 billion VND. Public Bank and Hong Leong experienced steeper declines of 40-50%, reporting profits of 319 billion VND and 73 billion VND respectively. CIMB Vietnam's losses in 2024 were also higher than the previous year.

The profit trend among foreign banks was less optimistic than that of domestic banks in 2024.

Explaining this trend, an analyst director at a securities company suggested that some foreign banks prepared resources and focused on specific segments, but the recovery of these segments fell short of expectations, impacting the profitability of foreign banks.

Meanwhile, domestic banks serving the ecosystem of large domestic enterprises had an advantage in boosting disbursements towards the end of the year, leading to better profit growth than their foreign counterparts.

This year, the retail lending sector continues to face difficulties. A representative of a foreign bank also noted a shift in the disbursement structure, with the proportion of corporate loans increasing significantly.

However, foreign banks typically serve foreign direct investment (FDI) corporate clients, a segment predicted to face challenges amid fluctuations in tariff policies.

Quynh Trang