NIM and Profitability Analysis in Commercial Banking - Case of Vietnam

Bui Thi Thu Hang, Nguyen Thu Thuy, Dinh Tran Ngoc Huy, Lê Ngọc Nương and Nguyen Duy Mau

To measure the effectiveness or profitability of a business organization, the commonly used criteria are the Profitability of assets - ROA, Profitability of equity - ROE. However, unlike non-financial business organizations, the operational characteristics of banks are "interest rate differential business", so the typical indicator in measuring profitability in banks' operations is the rate of collection. Enter marginal interest - NIM. Hence, this paper analyzes and compare NI in Vietnam commercial bank system to see risks and proposes some recommendations for commercial bank as well as State Bank of Vietnam (SBV). For instance, commercial banks need to reduce the cost of interest by mobilizing low cost capital mobilizing sources such as demand deposits from economic organizations and people, reducing high sources of capital mobilized in the interbank market.

Volume 12 | Issue 7

Pages: 314-324

DOI: 10.5373/JARDCS/V12I7/20202013