However, according to the estimates of many banks and organizations, did the profit of the banking industry still go up in the whole year 2020?
It is true the banking sector's profit is increasing, estimated to rise by 8-10% in 2020. However, compared with the previous periods, this figure is quite low, equal to a third of the previous year. Moreover, the announced and estimated profits of banks in 2020 have not fully reflected the difficulties and challenges of the banking system. It is because the impact of the pandemic on businesses and people has a delay, so the impact on the banking system will occur later.
For example, in Circular 01, the SBV allows to restructure and maintain the debt classification, so banks do not need to set aside provisions for possible bad debts to support enterprises. However, in the near future, the SBV will amend Circular 01 in the direction that banks must gradually make provisions for bad debts, which will significantly affect their profitability in 2021. Therefore, I predict bank profits in 2021 could increase about 10% over the previous year in a case of luck.
With such influence, how will business support activities continue to be deployed?
SBV leaders said the banking sector would try to reduce profit targets to support firms and the economy to overcome the impacts of the pandemic. Therefore, supporting activities and incentive programmes will be implemented as they were in 2020. Additionally, banks are extracting profits to invest in non-cash payments, digital banking and converting magnetic cards to chip cards to increase the revenue from their services. Because in recent years, revenue from retail services has contributed greatly to the banking industry's profits, avoiding dependence on credit revenue. Therefore, in the future, the SBV and relevant agencies need to improve legal institutions, especially the legal basis related to new business models like financial technology (fintech), peer-to-peer lending (P2P), and e-wallets to support banks.
By Huong Diu/ Ha Thanh