The fourth quarter is the peak business season of the banking industry. It is forecasted that the profit in this quarter will help many banks achieve and exceed the plan in 2019, in addition to the high profits in the first nine months of the year.
In 2019, Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) targets a 19.5 trillion dong pre-tax profit for the separate bank and 20 trillion dong of consolidated profit.
By the end of September 2019, the bank has completed over 85 percent of the target with 17.5 trillion dong of profit. It is one of the bank that is expected to exceed the profit target set in the whole year, because credit activities often grow rapidly in the last quarter of the year, while Vietcombank’s service revenue contributes positively into the total profit.
Vietcombank’s leader said that the bank expects to reach two billion US dollars of profit by 2025. The main drivers of growth are retail and digital banking, in which retail accounts for about half of the profit, equivalent to about one billion US dollars. Regarding digital banking, Vietcombank aims to hold the first position on the financial market.
For Orient Commercial Joint Stock Bank (OCB), the pre-tax profit in the third quarter (Q3) of 2019 was 825 billion dong, up by 51.6 percent over the same period of 2018; while the pre-tax profit in the first nine months of the year was 1.942 trillion dong, up by 15.3 percent over the same period of 2018. Compared to the target set for the whole year 2019 at 3.2 trillion dong, OCB has just completed about one third of this year’s profit target.
However, according to OCB’s general director Nguyen Dinh Tung, in October 2019 alone, the bank collected more than 900 billion dong of pre-tax profit. Thus, it is likely to exceed the profit target this year.
OCB’s credit growth is currently 20 percent, said Tung, adding that the bank is making efforts to collect debts to have more room for lending and promoting small loans to speed up capital turnover.
Vietnam Prosperity Commercial Joint Stock Bank (VPBank) recorded 7.199 trillion dong of pre-tax profit in the first nine months of the year completing 76 percent of the 2019 profit plan.
In particular, the profit contribution of FE Credit to the parent bank VPBank was significant. Since the last quarter of the year is the business season of the bank, especially the consumer lending activities of FE Credit. Therefore, VPBank is confident that it will reach the pre-tax profit target of 9.5 trillion dong set in 2019.
Vietnam Technological and Commercial Joint Stock Bank (Techcombank) recorded nearly 8.9 trillion dong of pre-tax profit in the first nine months of 2019. Compared to the whole year target of 11.750 trillion dong, the completion of profit is not difficult.
Not only big banks, small banks such as Saigon Commercial Joint Stock Bank for Industry and Trade (Saigonbank), Nam A Commercial Joint Stock Bank (NamABank), Vietnam Thuong Tin Commercial Joint Stock Bank (Vietbank), etc. are also approaching their profit goals in 2019. Some banks have even early completed the targets.
For example, Saigonbank is in the process of restructuring and bad debt settlement, etc. but since its provisions for risks declined in the first three quarters of the year, the bank has exceed the pre-tax profit target of 175 billion dong in 2019.
According to financial statements, in the first nine months of the year, Saigonbank recorded 221 billion dong of pre-tax profit. The on-balance sheet bad debts of the bank as of late September were 294 billion dong, down by seven billion dong compared to the beginning of the year.
Specifically, the bank’s bad debt ratio fell from 2.2 percent to 2.03 percent. The notable point is that in the structure of bad debts, the group five debt irrecoverable debts of Saigonbank account for 72 percent (211 billion dong).
Dr Vo Tri Thanh, deputy director of the Central Institute for Economic Management said that profits of the banking sector has gradually improved in the contract of economic growth, especially after the period after the industry stepped up restructuring.
However, bad debts remain a concern for banking activities. In fact, the debts that have been sold to Vietnam Asset Management Company (VAMC) will return to banks after five years, and banks must use profit source to increase risk provisioning.
When banks are able to handle these bad debts, the provisions then will be reversed and profit will grow better.
