The State Bank of Viet Nam (SBV) recently reported that in the first quarter the banking sector's return on assets, which measures the profitability of assets, was down by half year-on-year to just 0.23 per cent.—Photo anninhthudo

HCM CITY (Biz Hub)— Banks are pessimistic about their profitability this year, with several indicators in steady decline, according to the central bank.

The State Bank of Viet Nam (SBV) recently reported that in the first quarter the banking sector's return on assets, which measures the profitability of assets, was down by half year-on-year to just 0.23 per cent.

State-owned banks saw the steepest decline in ROA – from 0.76 per cent to 0.29 per cent.

Joint-stock banks' ROA decreased by 0.04 per cent to 0.18 per cent.

Return on equity, which measures the efficiency of capital in generating returns, also went down significantly to 2.52 per cent from last year's 3.97 per cent.

Again, the State sector was the worst performer, with the ratio plummeting from 11.37 per cent to 4.23 per cent. Joint-stock banks saw ROE increase from 1.36 per cent to 1.95 per cent.

SBV officials blamed the decrease in the rations on difficulties that banks faced like weak credit growth and steady cut in loan interest rates.

The central bank's data also shows that the spread between average lending and deposit interest rates was only 1.93 per cent after deducting bad debt provisions, much lower than the 2.33 per cent achieved late last year.

As a consequence, banks saw their performance decline relentlessly, with 24 of them reporting losses and 57 others seeing profits fall from the same period last year.

There are over 60 banks in Viet Nam. — VNS