Revenues from securities trading, capital contribution and share purchase made up significant amounts to banks’ profits in the first quarter of this year thanks to rising stock markets and low bond yields, post-audited financial statements in Q1/2018 of banks showed.
According to Techcombank’s financial statements, the bank’s proportion of net income per total operating income was just 54.6 percent while profit from non-credit activities accounted for as much as 45.4 percent of the total income.
Ending the first three months, Techcombank’s credit grew at rather modest level of 1.93 percent, lower than the average growth of the entire system at 3.5 percent. Accordingly, this segment brought the bank the net interest of VND2.546 trillion, up 16.6 percent from the same period last year.
Meanwhile, Techcombank witnessed the strong growth of other segments. Specifically, investment securities trading recorded the net profit to increase 4.7 times, to VND441 billion. The revenue from capital contribution and share purchase also reported the profit of VND894 billion, 2.5 times higher than Q1/2017, reckoning for 9.5 percent and 19.2 percent of the total profit.
VPBank’s profits from trading securities and investment securities also improved remarkably in the first quarter of this year, reaching VND30 billion and VND177 billion respectively, up 7.5 times and 2.4 times from the same period of 2017.
ACB’s investment securities trading in Q1/2018 had profit to triple from the same period, reaching VND138 billion. Do Minh Toan, CEO of ACB said over the last five years, ACB focused on handling the backlogs so the resources are not enough to welcome investment opportunities. Therefore, since 2018, ACB will focus more on seeking and welcoming investment opportunities. Besides, ACB will strengthen non-interest income, service income, while cutting and managing costs well.
Vietinbank’s total non-credit income in the first quarter of this year was more than VND1.601 trillion, up three percent from the beginning of this year. Of which, the profit from service activity increased 15.6 percent, reaching VND592 billion; the profit from trading securities doubled, touching VND239 billion; the profit from investment securities was VND79 billion compared to the loss of VND17 billion in the same period. The revenue from Vietinbank’s capital contribution and share purchase hit VND99 billion, up more than 3.5 times.
As a result, the net profit from Vietinbank’s pre-provisioning business activity was VND5.379 trillion. After deducting 2.351 trillion dong risk provisioning costs, the pre-tax profit was VND3.027 trillion, up 19 percent year-on-year, completing 28 percent of the whole year profit target.
However, according to securities analysts, with the interest rate re-increasing trend in Q2/2018 and the deep fall of the stock market, this revenue from securities investment is difficult to maintain good growth momentum in the remaining quarters of 2018 for banks. That is not to mention, banks are at risk of making losses due to unusual ups and downs of the stock market over the last period.
According to a report on the overall picture in Q1/2018 about business results of banks on stock exchanges of Viet Dragon Securities Company (VDSC), the total operating income and pre-tax profits of 14 listed banks were VND56.340 trillion and VND20.126 trillion respectively, up 35 percent and 52 percent from the same period of 2017.
The major source of income in the income structure of banks still came from interest. However, the growth and contribution ratio in the structure has divided among bank groups. The non-interest income in the group of small banks such as KLB, EIB, and LPB slightly decreased. In the group of big banks such as CTG, VCB, BID, the strong growth was recorded in BID with more than 34 percent.
http://www.hanoitimes.vn/economy/2018/05/81E0C78B/banks-gain-higher-profits-from-securities-trading/
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