Which bank optimizes operating costs the most in the first 6 months of 2024?

The lower the CIR ratio, the more efficient the bank is, spending less operating costs to generate a dollar of revenue. The picture of CIR ratios of banks in the first half of 2024 has largely improved significantly.

In terms of CIR improvement, according to statistics, BVBank is the bank with the strongest CIR decrease in the industry, up to 21.1%. In addition, some banks recorded significant CIR improvement, such as TPBank (down 12.1%), KienlongBank (down 11.2%), BaoVietBank (down 9.2%), SeABank (down 9%); VietBank (down 8.2%) and VPBank (down 5.2%).

On the other hand, banks such as VIB, OCB, ABBank, PGBank and Sacombank all had CIR increases in the first half of the year. In particular, Saigonbank recorded a double-digit CIR increase of 10.3%.

In a newly published report on the banking industry, Vietcombank Securities Company (VCBS) forecasts that optimizing operating costs is one of the main drivers for banking industry profits to grow at around 10% in 2024, in addition to optimizing capital costs and increasing non-interest income.

Specifically, in terms of optimizing operating costs, banks continue to promote digital transformation, enhance management efficiency, and reduce operating costs to maintain profits.

However, the report also notes that investment costs for technology are still in a strong growth cycle to increase competitiveness and meet new, stricter regulations on security and safety in payment activities.

Regarding the motivation to optimize capital costs, VCBS believes that, in the context of the mobilization interest rate environment being under pressure to increase again, the group of private banks with advantages in non-term deposits (CASA) and flexibility in capital mobilization activities (with a not too high level of dependence on customer deposits) will have a lot of potential to optimize capital costs, thereby improving profits.

Regarding non-interest income, fee income sources, VCBS expects that some banks can record unusual income from upfront fees of cross-selling insurance contracts (bancassurance), profits from selling subsidiaries, or recovering bad debts that have been written off.