Twenty five commercial banks have announced their financial statements in the second quarter (Q2) of 2019. In this financial period, no banks reported losses like in the same period of last year.
Unlike Q2 2018 when Maritime Bank Commercial Joint Stock Bank (MSB) and Saigon Commercial Joint Stock Bank for Industry and Trade (Saigonbank) recorded losses, in Q2 2019, all 25 banks reported positive profit results.
With 26.587 trillion dong of pre-tax profit of all 25 banks, the profit growth of the sector reached more than 27 percent when compared to the same period of 2018.
Achieving the highest profits are still familiar names like Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Technological and Commercial Joint Stock Bank (Techcombank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Military Commercial Joint Stock Bank (MBBank). Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) slipped out of the top five and was replaced by Vietnam Prosperity Commercial Joint Stock Bank (VPBank), which even surpassed BIDV and MBBank to become the bank with the third largest profit in the quarter.
However, in the first six months (H1) of the year, the top five banks with the largest profit still included Vietcombank, Techcombank, VietinBank, MBBank and BIDV with a total profit of 31.945 trillion dong, accounting for more than 60 percent of the total profits of 25 banks.
The total profits of 25 banks in H1 reached more than 53.076 trillion dong, up by 18.4 percent compared to H1 last year.
Nevertheless, it does not mean that all banks recorded good profit growth. Despite being in the top 5 banks in profit, BIDV still experienced a profit decline of four percent. At BIDV, the net interest income in six months was 17.683 trillion dong, slightly up by 1.3 percent over the same period of 2018. The profit decline in this period mainly came from the bank’s 6.8 percent increase in provisions for risks compared to the same period of last year, reaching 10.710 trillion dong.
The biggest profit reduction was recorded in four banks, including Export Import Commercial Joint Stock Bank (Eximbank, negative 29.4 percent), Saigonbank (negative 20.7 percent), Viet A Commercial Joint Stock Bank (VietABank, negative 19.4 percent), and Viet Capital Commercial Joint Stock Bank (VietCapitalBank, negative 18 percent).
Except VietABank of which the profit decline in the period mainly came from the 15 percent decrease in net interest income, other banks had their own reasons for the profit decline.
For Eximbank, the net interest income increased by 10.6 percent, along with the reversal of credit risk provisions, but the operating expenses rose up by 11.5 percent. In addition, the capital contribution via share purchase only contributed 4.1 billion dong in this period, while the contribution was more than 521 billion dong in H1 last year.
Regarding VietCapitalBank, the foreign exchange and investment securities trading was respectively down by 41 percent and 44 percent compared to the same period of 2018. The bank’s operating expenses also increased by 26 percent. These are the reasons for the decline in pre-tax profit of VietCapitalBank.
In contrary, MSB recorded the highest profit increase with pre-tax profit in the first two quarters reaching 566.8 billion dong, up by 192 percent over the same period of last year. In H1 2019, other activities of the bank, including foreign exchange trading, trading of investment securities, or other activities all declined but the 51 percent reduction in risk provisioning expenses (258.8 billion dong) supported the bank’s pre-tax profit growth.
Overall, positive growth in profit is still the main trend of banks in the first two quarters of 2019 when the decline was only seen in eight out of 25 banks which have announced financial statements.
With the achieved results, 11 banks have completed more than 50 percent of the profit targets set initially (except for Eximbank which has not yet finalised its business plan due to the failure to hold the 2019 annual general meeting). However, the pressure will be heavier for VietCapitalBank and National Citizen Commercial Joint Stock Bank (NCB) when they have only completed less than 30 percent of this year’s plans.
