The VinaCapital report on the banking sector's prospects for 2025, released in mid-January, states that Vietnamese bank stocks are currently trading at a price-to-book (P/B) ratio of 1.3 times, with projections for 2025 and an expected return on equity ratio of 16 per cent.
The current P/B ratio is nearly 2 standard deviations below the banking sector's 5-year average. Typically, for foreign investors, banks with a 16 per cent return on equity would trade at a P/B ratio above 2.
When considering the price-to-earnings (P/E) ratio in relation to earnings growth, banking sector stocks are also relatively undervalued.
The price-to-earnings-to-growth ratio is just 0.5 times, with a projected P/E of eight times and an expected Earnings Per Share (EPS) growth of 17 per cent in 2025. This valuation has shown slight improvement compared to the beginning of last year, as bank stock prices increased by 26 per cent in 2024, outpacing the average EPS growth rate of 14 per cent.
"Credit growth is projected to reach 13 per cent-14 per cent in 2025, supported by a GDP growth rate of 7.3 per cent, which will boost business confidence, investment, and household income. The demand for credit in 2025 will mainly come from businesses in the commercial, manufacturing, and construction sectors," said Barry Weisblatt David, director of Analysis Division at VNDirect.
In an interview with VIR, a representative from the State Bank of Vietnam (SBV) stated that credit demand is expected to increase across all sectors, categories, currencies, and terms for the first half and the full year of 2025.
"For 2025, the wholesale and retail sector, import-export, and loans for personal needs or consumer loans are expected to be the top three sectors driving the highest credit growth. The fourth sector is steel and other metals, replacing the manufacturing and processing sector, which was forecasted to lead in 2024," said the SBV representative.
The SBV leader also mentioned that to stimulate consumer credit growth, credit institutions are expected to maintain stable lending terms for businesses while loosening conditions for individual clients in the first half of 2025.
Similar to 2024, factors such as economic growth trends, interest rate movements, changes in investment demand for business production, changes in lending rates by credit institutions, and improved service quality are forecasted by many credit institutions to positively impact the increased demand for business loans in the first half of 2025 and the full year.
In addition to these factors, the improvement of lending products, conditions, and procedures at credit institutions is expected to have a significant impact on the rise in demand for loans from individual clients in the first half of 2025 and the entire year.
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Understanding the need for capital to realise personal financial plans, Bac A Bank has launched a credit programme, aimed at supporting individual customers in their journey to achieve life goals and expand business operations in 2025.
It is known that the programme's credit limit is up to $208.33 million, running until September. Customers participating in the scheme will benefit from short-term interest rates starting at 7.2 per cent per year and long-term loans starting from 5 per cent per year. From the customer's perspective, this interest rate is considered attractive and quite competitive in the market.
"There is no absolute advantage in the market today; the customer is the decision-maker and has many opportunities to close a credit package that meets an effective personal financial plan. The key point here is that the more personalised the service, the better the customer can optimise the loan," said a representative from Bac A Bank.
Previously, Vietcombank also announced the implementation of a preferential interest loan programme starting from 4.6 per cent per year for individual clients borrowing short-term business production funds. Notably, the size of this credit package is up to $10.42 billion and will be applied by the bank starting from January.
According to analysts, banks are still expected to benefit from economic growth due to internal factors. This is because banks finance almost all sectors of the domestic economy, and also lend extensively to the real estate and consumer sectors, which are expected to help boost the economy in 2025.
Nguyen Thuy Hanh, CEO and head of Banking & Coverage at Standard Chartered Bank Vietnam, stated that the Vietnamese lending market is one of the largest contributors to the development of the country's economy.
"Between 2020 and 2024, the lending market both domestically and internationally in Vietnam saw strong growth, with domestic lending increasing by 10 per cent, and international lending, including syndicated loans and group loans, growing by 22 per cent, from $2.9-5.2 billion."
"The lending market helps the capital market in Vietnam grow stronger, providing optimal funding solutions for clients seeking capital in urgent situations, thereby providing the necessary resources for the development of various industries," added Hanh.
Dr. Can Van Luc, chief economist at BIDV, stated that under the baseline scenario, Vietnam's economic growth in 2025 is projected to reach 8 per cent, building on the recovery momentum from 2024.
“Traditional growth drivers such as exports, investment, and consumption will be revitalised and effectively integrated with new growth drivers, including science and technology, digital transformation, the green economy, energy transition, circular economy, productivity improvements, and contributions from total factor productivity," he said.
Luc added that on the demand side, exports are expected to grow by 10 per cent to 12 per cent, FDI disbursements and public investment are projected to rise by 18 per cent to 26 per cent, while retail sales and consumption are anticipated to grow by 9 per cent to 10 per cent.
The contribution of final consumption to GDP growth is expected to remain at 4 percentage points, similar to 2024, with improvements in employment and income. Investment’s contribution to GDP growth will increase to 3 percentage points, up from 2.59 per cent in 2024.
On the supply side, economic sectors are forecasted to outperform 2024 levels, with agriculture, forestry, and fisheries growing by 3.5 per cent to 4 per cent, and industry, construction, and services expanding by 8.5 per cent to 9.5 per cent.
“The contribution of new growth drivers, such as total factor productivity to GDP growth is estimated at 45 per cent to 48 per cent. The digital economy is expected to contribute approximately 15 per cent to 18 per cent, while labour productivity is forecasted to rise by 6.5 per cent to 7 per cent,” Luc said.
"Strong economic growth will not only stimulate credit growth but also improve the credit quality of credit institutions, leading to higher valuations for bank stocks."
