Banks post strong performances in first 9 months
Hanoi (VNS/VNA) – Many banks have reported good business
performance in the first nine months of the year thanks to decreasing provision
costs and rising income from services.
According to the consolidated financial statement of Joint Stock Commercial
Bank for Foreign Trade of Vietnam (Vietcombank), its net profit in the first
nine months of the year was 16.68 trillion VND (712.86 million USD), up 34 percent
against the same period last year.
Thanks to a decline in provision costs for risky loans from 36.2 percent to
29.9 percent, the bank’s pre-tax profit in the period surged by 47 percent
year-on-year to 11.68 trillion VND, surpassing the pre-tax profit gained in the
whole of 2017.
Vietcombank’s impressive result was also thanks to a high growth in the
bank’s two core business segments, of which net profit from credit rose by 26
percent to 2.04 trillion VND and net profit from services surged by 34 percent
to 2.63 trillion VND.
Vietcombank’s outstanding loans in the first three quarters rose by 15.6 percent
to 627.95 trillion VND while mobilised capital reached 773.4 trillion VND. The
bank’s non-performing loan (NPL) ratio accounted for 1.18 percent of the total
outstanding loans.
Military Bank also reported acceleration in performance in the first three
quarters with an impressive pre-tax profit of 6 trillion VND, double the same
period last year. The bank’s profit from services contributed 1.69 trillion VND.
Vietnam International Bank (VIB)’s pre-tax profit in the period also
skyrocketed by 176 percent year-on-year to 1.72 trillion VND, following great
efforts put into tackling NPLs. VIB was among few banks that resolved all bad
debts at the Vietnam Asset Management Company (VAMC) in July so that it didn’t
have to spend provision costs on the bad debts.
The nine-month result for Tien Phong Bank (TPBank) also came out at 1.61
trillion VND, also doubling last year’s figure and achieving 75 percent of its
2018 target.
TPBank’s representative believed that the bank was confident of meeting its
goals this year, on the back of very strong business activities.
Smaller banks also posted high profits in the first three quarters. An Bình
Bank (ABBank)’s pre-tax profit surged sharply by 54 percent against the same
period last year to more than 658 billion VND while Vietnam Thuong Tin
Commercial Joint Stock Bank (VietBank) also reported pre-tax profit of 301.6
billion VND, nearly four times higher than the same period of 2017.
Analysts at Ho Chi Minh Securities Company (HSC) estimated that total profits
of listed banks in the first three quarters would increase by 41 percent
year-on-year. This forecast is based on the assumption that credit growth in
the period was only 11 percent.
According to HSC, credit growth in the last three months has slowed after
rising quickly in the first half due to concerns over inflation. The State Bank
of Vietnam (SBV) instructed banks to control lending to high risk sectors such
as real estate, consumption and securities.
However, with low credit growth, lending interest rates are on an upward trend,
which may improve banks’ net interest income (NIM), HSC noted. After several
months of remaining unchanged, lending rates started to rise in the last two
months, leaving the rate to be 0.46 percentage points higher than by the end of
last year.
Apart from this factor, the increase in non-interest income, irregular income
and declining provision expenses contributed to the overall profit increase.
According to HSC, non-interest income of banks also tends to increase sharply
thanks to increased service income and the contribution of new income streams
such as insurance commissions.
Meanwhile, provision costs are on a downward trend. Based on HSC’s rough
estimation, the overall provisioning expense for listed banks rose by only 10
per cent in the first nine months.
Pham Hong Hai, general director of HSBC, also attributed the bank’s high
profits in the first three quarters to a decrease in provision costs for NPLs
of the banks, adding that NPLs at the banks reduced significantly compared with
last year thanks to their efforts in dealing with bad debts.-VNS/VNA