Statistics on 24 banks announcing their financial statements in the first quarter of 2019 showed that the number of profitable banks increased.
In terms of absolute value, Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) is still the most profitable bank in the industry. In Q1, Vietcombank’s net interest income reached over 8.498 trillion dong (ranked second in the industry after Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)), up 37.1 percent over the same period last year.
While securities trading and other trading activities decreased by 76 percent and 27 percent respectively, the profit from services, foreign exchange and gold trading increased. Service activities recorded net profit of over 1.069 trillion dong, up 21 percent. Foreign exchange and gold trading activities also reached 928 billion dong, increasing by 51 percent.
Meanwhile, the increase in operating and credit risk provision expenses only helped this bank achieve a profit growth of nearly 35 percent, reaching 5.878 trillion dong in profit before tax. With the plan of 20 trillion dong for the whole year, Vietcombank has completed 29 percent.
For BIDV, this is the bank with the highest net interest income in the industry with 8.545 trillion dong in the first quarter, however, this profit decreased slightly by seven percent over the same period. In other segments, although net profit of services, foreign exchange, gold trading and other activities had grown notably, net profit of securities trading activities decreased by 93 percent, achieving 38.7 billion dong. In addition, investment securities trading activities have losses of over 389 billion dong. Therefore, BIDV’s profit before tax only increased slightly by 1.4 percent to 2.52 trillion dong. This bank is still in the top five in terms of profit in the industry in the first quarter.
The trading of investment securities is also one of the major reasons that Vietnam Technological and Commercial Joint Stock Bank (Techcombank) increased its net interest income by 32 percent but the profit before tax only went up by two percent. In this period, net profit from investment securities trading decreased by 86 percent over the same period, bringing in nearly 64 billion dong.
Meanwhile, although securities trading activities increased eight times, the contribution value was only more than 84.6 billion dong. In addition, foreign exchange and gold trading activities were not as expected when only reaching 9.16 billion dong of net interest income, 80 percent lower than the same period.
Operating expenses also increased by over 27 percent, accounting for 1.61 trillion dong. Although the provision for credit risk was reduced by 80 percent to 167.3 billion dong, Techcombank’s pre-tax profit was approximately equal to the same period last year.
Total pre-tax profit of the top five banks including Vietcombank, ietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank), Techcombank, BIDV and Military Joint Stock Commercial Bank (MB) in the first quarter reached over 16.591 trillion dong, accounting for over 61 percent of the total profits of 24 banks listed.
In the downward trend, it is quite unfortunate for the case of Vietnam Prosperity Joint Stock Commercial Bank (VPBank) and Vietnam Joint Stock Export Import Bank (Eximbank) when their net interest income increased by 16.8 percent and 24.2 percent respectively, but due to ineffective other activities, making overall profit after tax decrease by over 30 percent.
The pressure of credit growth currently creates pressure on the revenue of small and medium banks in the first quarter. There are four banks with income from this activity decreasing compared to the same period including BIDV, Bac A Joint Stock Commercial Bank, National Citizen Bank and Viet Capital Joint Stock Commercial Bank (Viet Capital Bank).
Saigon Bank for Industry & Trade ‘s net interest income and Petrolimex Group Joint Stock Commercial Bank only increased slightly in the last quarter. Credit increased cautiously, creating considerable pressure on banks’ profit, in the downward trend. Viet Capital Bank had the largest decrease in Q1 with pre-tax profit of 21.6 billion dong, decreasing by 75.1 percent.
