Mortgage growth to lift Viet banks’ earnings in 2025

Mortgage loans may grow by 20% during the year, from 10% in 2024.

The earnings growth of Vietnam’s banking sector is expected to accelerate to 17% in 2025, according to a report by VinaCapital.

This will be driven by a 15% system-wide credit growth and a slight increase in their net interest margins (NIMs) by 6bps during the year.

Banks are particularly expected to enjoy loan growth from a boost in the real estate market. The government is expected to take concrete steps to boost this market, which in turn could lead to a mortgage loan growth of 20% in 2025.

“A real estate market revival would also boost consumer confidence, as well as other forms of high margin consumer lending, such as auto loans and buy-now-pay-later purchases," VinaCapital chief economist Michael Kokalari and senior bank analyst Thuy Ahn Nguyen said in a report published on 9 January 2025.

Authorities also plan to support 2025 GDP growth by spending more on infrastructure development, which should create more lending opportunities for banks.

Real estate is expected to be one of Vietnam’s main economic growth drivers in 2025, alongside consumption, infrastructure, spending.

In 2024, drivers were exports and tourism, which helped the banking sector’s earnings to grow 14% during the year.

Vietnam’s export growth to the US is expected to slow in 2025. Slower export growth will weigh on GDP growth because exports are nearly 100% of the country’s GDP. However, most of Vietnam’s exports are produced by FDI companies that are not reliant on local banks for financing.

“While slower exports will affect the economy, they will not significantly hurt the banks,” Kokalari and Nguyen said.

Slower exports will also be offset by increases in infrastructure spending, real estate development activity, and consumer spending.

Banks will also be the biggest beneficiaries of the shift to a more domestically driven growth, the analysts said, especially thanks to their exposure to Vietnam’s real estate and consumption-related sectors.

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