Vietnamese banks' return on assets up for second straight year at 1.1% in 2018

Wider net interest spreads and lower credit costs boosted profitability.

Vietnamese banks achieved profit gains in 2018 as return on assets rose for the second straight year at 1.1% in 2018 from 0.9% in 2017, reports Viet Nam News.

The banks’ aggregate net income also climbed 35% to $3b (VND70t) in 2018 despite a moderation of credit growth.

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"For 2019, Vietnamese banks that Moody’s rates will achieve a further improvement in profitability, again because of wider net interest spreads and lower credit costs," said Rebeca Tan, a Moody’s analyst.

Despite a better year for profits, banks still face massive capital shortages estimated at around 9% of GDP to meet the Basel II requirements that will take effect in 2020. With this, Moody’s said that banks could raise capital from foreign investors amidst the underdevelopment of the domestic capital market.