Small-sized banking is expected to see the strongest pre-tax profit growth rate in the banking industry in the second half of 2025 thanks to boosting real estate credit and accelerating bad debt handling, experts forecast.
In a recent H2 2025 outlook report, analysts of the Vietcombank Securities Company (VCBS) forecast that the pre-tax profit growth of the entire banking industry in 2025 could reach 18 per cent.
In particular, the small-sized banking group is expected to have the strongest growth rate of up to 35 per cent thanks to boosting real estate credit from a low base and starting to accelerate bad debt handling. It is expected the group will also have notable deals in changing the stock exchanges.
The small-sized banking group is forecast to have notable deals in changing the stock exchanges in H2 2025
Meanwhile, the private bank group is forecast to gain a pre-tax profit growth of 20 per cent, while the State-owned group will increase by about 12 per cent.
Analysts believe that private banks will benefit from policies to encourage the private economy and improve asset quality. The private bank group is also expected to witness many outstanding stories, such as IPOs, restructuring and debt collection.
Regarding credit activities, VCBS maintains an optimistic view on credit growth, forecasting that the entire banking industry can achieve its target of 16 per cent growth by the end of this year. The main driver comes from low interest rates and many incentive packages launched for the fields of technology, real estate and small and medium enterprises (SMEs).
Notably, the promotion of public investment and the removal of real estate legal issues will create credit growth in the home loan and construction material segments. At the same time, the positive results of tariff negotiations between Việt Nam and the US are also expected to boost production and import-export growth again.
The banking industry's net interest margin (NIM) is expected to gradually recover in the second half of the year after bottoming out in the second quarter, but the recovery level is unlikely to be equivalent to the second half of last year.
VCBS believes that monetary policy continues to loosen, and the liquidity of the banking system is abundant. In particular, the recovery in credit demand, especially from the SME and retail segments, helps reduce competitive pressure among banks.
Regarding asset quality, it is expected the bad debt ratio will gradually decrease, and the bad debt recovery will be more favourable.
A VCBS report showed that the potential bad debt ratio has gradually decreased for four consecutive quarters, helping banks reduce pressure to transfer debt groups. The revised Law on Credit Institutions to include Resolution No. 42/2017/QH14 on bad debt handling into the law, along with the recovery of the real estate market, has made the process of recovering mortgaged assets more favourable, especially for small banks with high bad debt ratios.
