Every quarter, banks release their earnings reports. Social media erupts: "banks are bleeding the public dry". The absolute profit figures sound genuinely staggering - but that's just the tip of the iceberg. Underneath lies leverage, equity capital, and a risk that no other industry carries: a bank can look perfectly healthy right up until it collapses. This piece separates what's simply inevitable from what's genuinely worth worrying about.
Scope: A close read of a familiar issue across three layers - the mechanics of bank profit (capital, leverage, ROE), industry-specific risk (four failure cases: Lehman, SVB, Credit Suisse, SCB), and the picture in Vietnam (the region's lowest CAR). Figures are drawn from public disclosures, VnExpress, FPT IR, CEIC, CNBC, FDIC, and Macrotrends.
Note: Not financial advice. ROE, CAR, and leverage figures are approximations - exact numbers vary by quarter and by bank. The discussion of bailouts and oversight at the end is an economic perspective, not a policy recommendation.
What Is Social Media Saying?
Every time quarterly earnings tables drop, the same familiar refrain returns. Some of it is right, some of it is wrong - but wrong in places not everyone notices.
"Banks are raking in massive profits while poor people are drowning in debt. Something's not right!"
"FPT creates real value while banks just lend money and pocket the spread. What kind of industry is that?"
"Banks don't create any value. It's coders who create real value!"
The comments above are partly right but framed wrong. Something really is off - just not where people think. The real concern isn't "banks profit too much", it's "banks can collapse without warning, and when they do, taxpayer money bails them out".
A Bank Is Not a Pawnshop
The biggest misconception: "the bank borrows at 5%, lends at 10%, and pockets the 5% spread." The arithmetic is right, but the story is wrong - because it ignores the capital a bank has to put up before it's even allowed to lend.
Borrow at 5% → Lend at 10% → Pocket 5%. Yes, there's a spread being captured. But if it were really that simple, anyone with money could open a bank.
What's left out: to lend VND 1,000 billion, the bank must set aside a minimum of VND 80–100 billion in capital under Basel III. And the gross interest income still has to cover salaries, bad-debt provisions, and taxes - eating up more than half of it.
Lend VND 1,000 billion → a 5% spread = VND 50 billion in revenue. After expenses (salaries, operations, provisions) and tax: net profit is only ~VND 18–20 billion.
In short: 100 units of capital → 1,000 units of lending → 50 units of revenue → ~18–20 units of net profit. And most of that has to be retained to meet capital-adequacy requirements - it can't all be paid out.
A concrete example: Vietcombank, 2024
A profit of VND ~41,200 billion sounds enormous - but shareholders' equity is nearly VND 200,000 billion. That means 200 units of capital generate 41 units of profit, ~34 after tax, and most of it has to be retained because ~15%/year credit growth requires the bank to keep adding capital just to stay within safety ratios. Shareholders don't get to "eat" the whole number.
VCB is like a gold shop earning VND 41 million a month but having to keep VND 200 million worth of gold in the vault. FPT is like a coffee shop earning VND 11 million a month on just VND 45 million in capital. The absolute figures differ by 4x - but on return per unit of capital, VCB (~18.5%) actually trails FPT (~23%).
Why do banks always top the absolute-profit rankings?
Buying a house? Borrow. Starting a company? Borrow. Building a road? Borrow. More cash flows through banks than through any other industry - so absolute scale is always going to be large.
Banks hold assets worth 10–15 times their equity (mostly in the form of loans). Most of those assets generate interest income. No other industry operates with leverage this large.
China, Europe, Vietnam - the highest absolute profits usually belong to banks. The U.S. is the exception because Apple and Microsoft are so dominant. A structural consequence, not a conspiracy.
The Fatal Paradox - Four Tombstones
In manufacturing, when business goes badly, revenue drops and losses show up clearly. Banks are different: some post record profits and then collapse, some carry 167 years of credibility and then dissolve, some get hollowed out from the inside without anyone noticing. Four deaths, four mechanisms - but the common thread is: depositors are always the last to know.
Overexposed to risky real-estate assets (MBS, CDOs). When the housing market collapsed, those assets lost value, and thin capital couldn't absorb the hit - everything was wiped out.
Held large amounts of long-duration bonds. When the Fed raised rates rapidly → bond prices fell → hidden losses were exposed → depositors panicked and pulled funds via the app. Dead within 48 hours.
Suffered losses in 2021–22 from back-to-back scandals (Archegos, Greensill). 167 years of accumulated credibility unraveled in a matter of weeks once confidence broke.
According to records compiled by international press: ~$12.5 billion was siphoned out through related-party companies. The books looked "healthy" while the assets had already been hollowed out.
Why can a bank "look healthy" right before it dies?
Reclassifying loans, restructuring maturities, or simply not recording them. The reports still look "healthy" while the inside has already "rotted." SCB was the extreme case: the books were deliberately falsified.
Banks run on confidence. Once confidence is lost, depositors withdraw all at once - no bank holds enough cash to pay everyone back. SVB in 2023 died, quite literally, within 48 hours.
Lending at 10–15 times capital means it only takes 5–7% of loans turning bad to wipe out capital entirely. But that 5–7% bad-debt ratio can take years to surface - while the reports still look "clean."
Whether the cause of death was market risk (Lehman, SVB), scandal (Credit Suisse), or fraud (SCB) - all four share one thing in common: depositors and investors don't catch the warning signs until it's too late. This is a risk unique to the industry that few others carry - and it, not the profit figures, is the thing that's actually worth worrying about most.
Comparing Across the Wrong Frame
Comparing a bank to FPT ("the coder who creates real value") is like comparing a supermarket's revenue to a phở stall's. The supermarket sells VND 10 billion a day, which sounds massive, but it runs on hundreds of billions in capital and a 1–2% net margin. The phở stall sells far less, but earns a 30% return on capital. Which one is "better"?
Looking at the right metric (ROE), banks are actually less efficient than FPT per unit of capital. But a bank manages 10–15 times its own capital thanks to leverage - so the absolute profit figure is naturally larger. Math, not conspiracy. The trade-off that comes with it: risk is amplified by the same 10–15x.
The Global Picture
In most economies - not just Vietnam - banks sit at the top of the profit rankings. This is a structural consequence of credit-driven economies, and it's especially pronounced in countries that rely more on banks than on capital markets.
Credit-heavy economy → money flows through banks → banks post the highest absolute profits. This is a structural consequence, not a conspiracy. But it's also not a reason to skip oversight - the anti-bank backlash in the West after 2008 produced Basel III and Dodd-Frank, and that's the real, tangible effect of criticism aimed in the right direction.
Vietnam's Leverage - the Thinnest Buffer in the Region?
If leverage is a double-edged sword, Vietnamese banks are holding a thinner blade than their regional peers. The metric that measures this is CAR - Capital Adequacy Ratio: equity capital divided by risk-weighted assets. The higher the CAR, the thicker the "buffer" against a shock.
CAR explained with an everyday example
You have VND 100 million of your own money, and you raise another VND 900 million from your neighbors → you now have VND 1 billion to lend out. CAR = 100/1,000 = 10%. For every 100 units you lend, you have 10 units of your own money to absorb losses.
If 10% of borrowers default, even after recovering 50% through collateral: the real loss is ~VND 50 million → your capital drops to VND 50 million → CAR falls to ~5%, below the minimum. If recovery is worse, you lose your capital entirely.
Basel III requires a minimum of 8%. Vietnam applies exactly 8%. Most of the region raised its own bar to 11–15% long ago.
CAR bank by bank - who's safe, who's on the edge?
| Bank | Type | CAR | Assessment |
|---|---|---|---|
| Techcombank | Private | ~14–15% | Best in the system |
| VPBank | Private | ~13–14% | Above average |
| Vietcombank | State-owned | ~12% | Fine - highest of the Big 3 |
| BIDV | State-owned | ~9–10% | Near the 8% floor |
| VietinBank | State-owned | ~9–10% | Near the 8% floor |
The State Bank of Vietnam has announced a roadmap to raise the minimum CAR to 10.5% starting in 2030 - a step in the right direction. Even so, that level remains lower than Indonesia's (26.7%) and Thailand's (20%) current levels. Deposits under VND 125 million are protected by Deposit Insurance (DIV), and regulators did step in when SCB ran into trouble.
Criticism Misplaced vs. Criticism Well-Aimed
Criticizing banks isn't always wrong. The issue is that well-aimed criticism produces reform (Basel III, stress tests, Dodd-Frank); misplaced criticism solves nothing, and sometimes triggers baseless panic.
- "Banks profit too much" - ROE is only 18–22%, which per unit of capital is no more impressive than FPT.
- "Banks don't create value" - banks channel capital flows; they are the lifeblood of the economy. Without banks, there's no credit for any industry.
- "Coding/manufacturing is the real value" - a comparison across the wrong frame. Different industry, different capital scale, different risk.
- Privatized profit, socialized loss - when banks profit, shareholders benefit; when banks collapse, the public budget has to bail them out. This is a real risk asymmetry.
- Weak oversight - SCB was reportedly hollowed out by ~$12.5 billion over several years before it was detected.
- Systemic risk - one large bank collapsing can drag down the entire economy. This is why banks need tighter oversight than any other industry.
"Banks are bleeding the public dry!" → hits an emotional nerve, goes viral, and can trigger a run on a perfectly healthy bank. "We need tighter oversight, conditional bailouts, and shareholders bearing losses before taxpayer money is used" → is the kind of criticism that produced Basel III and Dodd-Frank elsewhere. One is destructive, the other is constructive.
Four Takeaways
Banks manage 10–15 times their own capital thanks to leverage → the absolute profit figure is large. But an ROE of ~18% is no more impressive than FPT's (~23%). Math, not conspiracy.
Whether the cause is market risk (Lehman, SVB), scandal (Credit Suisse), or fraud (SCB) - depositors are always the last to know. This is the industry-specific risk actually worth worrying about.
BIDV and VietinBank sit at only ~9–10%, near the 8% floor. Indonesia is at ~26.7%, Thailand ~20%. Not a reason to panic - a reason to demand tighter oversight.
Demanding tighter oversight, conditional bailouts, and transparency is constructive criticism. "Banks bleed the public dry" is just a slogan - it solves nothing and can trigger baseless panic.
03 Discussion
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