Up to this point, some banks have announced their profit in 2018. A common point is that the credit growth of the sector as well as of each bank was low, but their profit was very high.
Recently, at the conference on deploying tasks of the banking sector in 2019, Nghiem Xuan Thanh, Chair of the Board of directors of Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) said that the bank attained over 18 trillion dong of pre-tax profit in 2018. This number does not only help the bank maintain its leading position, it is also higher than the sum of the profits of the next two following banks.
In 2019, Vietcombank aims to increase its total assets by 12 percent, mobilisation by 13 percent, credit by 15 percent, profit by 12 percent (over 20 trillion dong) and control bad debt ratio below one percent.
For Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), the consolidated pre-tax profit in 2018 reached more than 2.2 trillion dong, 20 percent higher than the target assigned by the bank’s general Meeting of Shareholders.
According to the basic business results of Tien Phong Commercial Joint Stock Bank (TPBank), its pre-tax profit grew by nearly 100 percent compared to 2017, reaching 2.258 trillion dong.
Along with TPBank, some other banks recorded significant profit growth such as Vietnam International Commercial Joint Stock Bank (VIB) and HCM City Development Commercial Joint Stock Bank (HDBank). VIB continued to see rapid pre-tax profit growth of more than 95 percent over 2017.
One of the reasons for the sudden increase in banks’ profits is the exciting real estate investment in the first half of 2018, along with the development of private investment or other consumer credit activities. The huge profit numbers are good signals of the banking sector in 2019. According to economist Nguyen Minh Phong, the results in 2018 of the banking sector does not only reflect the good growth of the national economy but also show the breakthrough in banks’ operation with higher profit year-on-year. Particularly, as the credit growth in 2018 was only 14 percent, it pointed out a higher efficiency in lending compared to 2017.
In addition to the optimistic growth figures of the banking sector, Phong shared that what he and the experts wonder most is the basis of the profit. It is a concern if it is just the accounted profit, which means that it awaits a recovery of capital; because high interests are often associated with big loans and high lending interest rates. That will create some risks such as the ability of customers to pay the debts on time, or the risks in the operation of other business lines such as real estate, consumer lending, etc.
“The high credit growth is very encouraging but it also needs to be harmonised to ensure profitability growth for businesses and sustainable economic growth. If it is merely for the benefits of banks, it will surely create pressure to the economic activities of businesses”, said Phong.
Although profits of the banking sector in 2018 reached high levels, there will be more obstacles in 2019 when the credit growth can hardly grow high while the pressure to meet the Basel II standards is getting heavier. To increase revenue, banks will have to promote the development of service activities but it is difficult to expect a strong increase in a short time.
At a different perspective, HCM City Securities Company (HSC) said that year 2018 is a special year of growth for the banking sector. The pre-tax profit of listed banks was estimated by HSC to grow by more than 45 percent in 2018, higher than the 30 percent given in the previous forecast.
“The credit tightening policy will affect banks’ profitability in 2019 but insignificantly. It is forecasted that the profit of banks will grow by about 20 percent,” HSC predicted.
