Recently released financial statements of the third quarter of this year of commercial banks showed that banking industry has continued to flourish with extremely positive profit growth, in which a large part was contributed by revenue from services.
Leading the banking system was still the state-owned commercial bank, Vietcombank, with nine-month-accumulated pre-tax profit reaching VND17.59 trillion. For such result, profit growth of Vietcombank hit up to 50.6 percent in comparison with the same period last year and is likely to continue to make a record, surpassing the mark of VND20 trillion this year.
Agribank also posted nine-month profit of VND9.7 trillion, or 88 percent of this year’s target of VND11 trillion. Meanwhile, BIDV saw not-so-good nine-month profit. Although its profit still exceeded VND7.02 trillion, there was a decrease of 3 percent over the same period last year as the lender had to save resources to deal with bad debts.
Bad debts by the end of third quarter of this year of BIDV has risen from 1.9 percent to 2.09 percent while growth is limited by business capital. Therefore, although total asset is up to VND1.42 quadrillion, pre-tax profit of BIDV is behind several joint-stock commercial banks.
Not only state-owned commercial banks but also private commercial banks made strong breakthrough. Nine-month business results of some private commercial banks even passed those of some state-owned commercial banks. Particularly, Techcombank’s nine-month pre-tax profit reached VND8.9 trillion, an increase of 19 percent over the same period last year.
Similarly, nine-month pre-tax profit of VPBank nearly touched VND7.2 trillion, up 17 percent over the same period last year. ACB’s nine-month profit rose by 16 percent over the same period last year to VND5.56 trillion. HDBank also announced that its profit of third quarter of this year surged by more than 50 percent over the same period last year with pre-tax profit in the first nine months of this year exceeded VND3.4 trillion, the highest business result in the history of this lender.
Reviewing some private commercial banks, it shows that the reason that helped nine-month profit to grow mainly comes from net interest. Specifically, profit of VPBank increased strongly after the first three quarters of this year as net interest income nearly reached VND22.43 trillion, up 23 percent over the same period last year. Of which, more than half of net interest income came from consumer lending company FE Credit.
An all-time high nine-month profit of Techcombank was also from net interest income which reached VND10.1 trillion, an increase of 24 percent over the same period last year thanks to strong credit growth and reduction in lending costs since the beginning of this year. In addition, provision expenses decreased by 66 percent as Techcombank continued to benefit from healthy assets.
Net interest also accounted for up to 77 percent of total revenue of ACB and hit VND8.78 trillion, followed by interest from services with VND1.41 trillion, or 12 percent, and interest from other activities with VND697 billion, or 6 percent.
As for Vietcombank, revenue from services and retail has been positively contributing to its profit. It is the reason that Vietcombank expected a profit of $2 billion in 2025, of which, retail will contribute around $1 billion.
Small and medium sized commercial banks also had their profits in the third quarter improved thanks to increasing revenue from services, cutting operation expenses, especially, provision for credit losses, though room for credit growth is limited. For instance, Saigonbank had pre-tax nine-month profit of VND221 billion, up 81 percent year-on-year as its provision cost was reduced heavily.
The consolidated financial statement of the third quarter of Saigonbank showed that provision cost of this lender dropped by 68 percent to VND11 billion while net interest income reached VND210 billion, up 36 percent; interest from other activities touched VND30 billion, up 20 percent.
OCB also got pre-tax profit of VND1.94 trillion in the last nine months, up 15.3 percent year-on-year. Of which, net interest from service activities of OCB also increased sharply to up to 87 percent year-on-year, reaching VND391 billion.
Similarly, pre-tax of Sacombank in the first nine months of this year hit VND2.49 trillion, up 89.5 percent year-on-year. Revenue from services alone hit VND2.13 trillion, up 21.1 percent, of which, revenue from insurance service exceeded VND280 billion, accounting for 13.3 percent of total revenue; revenue from foreign currency trading was VND422 billion, up 35 percent; and revenue from other activities was VND845 billion, up 176.2 percent.
Viet Capital Bank also got positive business figures in the first nine months of this year, especially, revenue from service activities increased heavily, 2.5 times higher than the same period last year.
Financial experts said that optimistic profit growth in the first nine months of credit institutions not only cleared concerns about a decline in profit growth of banking industry as credit limit of several banks has nearly been exhausted whereas capital cost climbed, but it also forecast prosperity for credit institutions in the fiscal year of 2019.
According to the State Bank of Vietnam, by the end of this year, 91 percent of credit institutions expect their profit growth to post positive growth compared to last year, whereas 3 percent expect unchanged growth and 6 percent concerned that their profit growth will decline.
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