RAM expects that the banking industry will achieve moderate profit growth in 2025, with loan growth expected to remain at 5.5%, and asset quality also remains robust.
Wang Yunqing, Co-Director of RAM's Financial Institutions Rating Department, expects that Banks' profits will grow moderately this year, mainly supported by stable loan expansion and ongoing low provisioning expenses.
Looking back at 2024, the profitability of our country's Banks was strong, mainly benefiting from higher non-interest income, lower provisioning expenses, and robust loan growth.
Among the 8 local Banks tracked by the Institutions, the average pre-tax return on Assets (ROA) and return on Equity (ROE) rose to 1.40% and 14.0% respectively last year.
The net interest margin has narrowed.
Last year's performance of the Banks' net interest margin (NIM) varied, but overall, it narrowed by an average of 2 basis points to 2.06%.
"To maintain NIM, Banks actively manage funding costs such as reducing high-interest deposits. We expect this year the Banking sector's NIM will remain basically stable, consistent with our expectation that the overnight policy rate (OPR) will remain unchanged."
Regarding loans, Wang Yunqing pointed out that domestic lending is expected to grow by 5.5% in 2024, compared to 5.3% in 2023, with household loans, mainly car loans and mortgages, leading the growth at 6.0%, ahead of corporate loans at 4.8%.
"We expect that loan growth will remain around 5.5% in 2025."
This year's economic growth is estimated at 4 to 5%.
This is RAM's assessment based on 2...

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