Profits do not fully reflect the performance of a bank, but are still considered as a financial measure to determine its rankings. In 2018, bank ranking had a great disturbance.
According to the results announced by the banks, Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) topped the list in terms of profit, with profit before tax (PBT) of over 18,000 billion dong in 2018. Vietcombank aims to achieve PBT of over 20,000 billion dong in 2019. Vietnam Technological and Commercial Joint Stock Bank (Techcombank) stayed at second position in the ranking, with PBT of about 10,000 billion dong, being followed by Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and Vietnam Prosperity Joint Stock Commercial Bank (VPBank) respectively.
BIDV chair, Phan Duc Tu, said that the bank earned 9,600 billion dong of PBT in the year, an increase of 11 percent compared to 2017. Meanwhile, VPBank estimated the profit of nearly 9,200 billion dong before tax, which increased by12 percent compared to 2017.
In comparison with VPBank, the profit of Vietnam Joint Stock Commercial Bank of Industry and Trade (VietinBank) was still lower. This bank officially missed the Top five. In 2018, VietinBank’s PBT reached more than 6,800 billion dong, exceeding two per cent of the adjusted plan, but falling sharply compared to the PBT of 9,200 billion dong in 2017. In particular, VietinBank’s credit grew only by 6.1 percentin 2018; especially, in the fourth quarter, it decreased by more than 26,000 billion dong due to capital raising obstacle.
In fact, VietinBank’s capital raising plan has not been approved, while the initial restructuring scheme has been implemented, making VietinBank narrow its operations in the last quarter of the year. Reducing outstanding loans and increasing provision are the main reasons for the bank’s fluctuation in profitability.
This year, Military Joint Stock Commercial Bank (MB) and Vietnam Bank for Agriculture and Rural Development (Agribank) all achieved PBT higher than VietinBank. Chair of Agribank Trinh Ngoc Khanh shared the profit of Agribank was estimated at 7,500 billion dong. Simultaneously, MB achieved 7,600 billion dong in pre-tax profit.
For first time in Vietnam’s banking industry history, there was no overwhelming dominance of provisioning and superiority in profits of state-owned commercial banks. The private joint stock bank has marked its noticeable position in 2018.
For example, Vietnam International Joint Stock Commercial Bank (VIB) reported PBT of 2,741 billion dong, doubling compared to the previous year. This profit also exceeded 37 percent of the plan set out at the beginning of the year. TienPhong Joint Stock Commercial Bank (TPBank) and Saigon Thuong Tin Joint Stock Commercial Bank (Sacombank) were following tightly when both forecasted profits climbed sharply, reaching over 2,200 billion dong. Meanwhile, Maritime Joint Stock Commercial Bank (Maritime Bank) estimated PBT of over 1,000 billion dong, much higher than the previous year thanks to some unusual incomes. Vietnam Joint Stock Export Import Bank (Eximbank) expected to exceed the profit of 1,600 billion dong as planned. Kien Long Joint Stock Commercial Bank (Kienlongbank) and Nam A Joint Stock Commercial Bank (Nam A Bank) recognised 300 billion dong and over 750 billion dong in PBT respectively.
What to expect in 2019?
Banking activities in 2019 are considered more difficult by financial and securities analysts, when credit growth is hard to increase and the pressure to meet Basel II standards is growing. In order to increase revenue, banks will have to promote their service activities, but not to expect in a short time.
However, according to the latest survey of The Forecasting & Statistics Departmentof the State Bank of Vietnam, credit institutions are more optimistic about business activities in 2019. On the basis of subjective and objective factors, 86 percent of credit institutions rated their performance in 2018 better than the end of 2017 and about 88 percent expected the business situation in to continuously improve compared to 2018, of which about 35 percent forecast credit will improve more significantly. Regarding credit growth in 2019, credit institutions expected credit balance of the whole system to go up by 15.27 percent on average, in which loans in dong is considered to increase higher than in foreign currency.
