Sri Lanka and Vietnam banks to boost 2025 financials

Sri Lanka’s political crises are receding; Vietnam will be lifted by higher loan growth

Banks in Sri Lanka and Vietnam are expected to continue improving their financial performances in 2025.

For Sri Lanka, the political crisis in 2022 and ongoing economic crisis in 2023 are receding, analysts said.

The country is reportedly close to completing its foreign-currency debt restructuring, which could lift its default status and improve its credit profile, according to Fitch Ratings analysts.

“Successful restructuring would ease the burden on banks’ financial profiles, boosting business generation and revenue prospects in 2025,” they said.

In Vietnam, higher loan growth and lower credit costs will sustain the improvement of banks’ financial performances.

“Banks are likely to continue to run down their reserve coverage as they become more optimistic about the economic outlook, leading to lower credit costs,” said Fitch Ratings.

Restructured loans under relief constitute a ‘modest’ proportion of system loans, and most large banks in Vietnam have fully provisioned for such exposures. This limits the risks to their earnings and balance sheets, Fitch said.