Statistics of 26 banks which have released their financial statements for the first quarter (Q1) of 2020 showed that the profit before tax of these banks reached 28.881 trillion dong in the first three months of the year, up by six percent over the same period of 2019. In general, this growth is lower than two to three years ago.
Eleven out of 26 banks recorded a drop in profit compared to the same period of last year, including many large banks such as Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Military Commercial Joint Stock Bank (MBBank), etc., mainly due to the slow growth of net interest income because of lower interest rates, low credit growth, and strong increase in risk provisioning expenses.
Meanwhile, banks that saw high profit growth (geometric progression) were mainly small banks such as Orient Commercial Joint Stock Bank (OCB) with profit doubling to over 1.1 trillion dong; Maritime Commercial Joint Stock Bank (MSB) with profit increasing by fourfold to 290 billion dong; Vietnam Thuong Tin Commercial Joint Stock Bank (VietBank) with over two-time profit growth, reaching 230 billion dong of profit (up by over two times); Viet A Commercial Joint Stock Bank (VietABank) with 3.5-time profit increase, reaching 81 billion dong, etc. The growth momentum of these banks came mainly from the non-credit income, especially the sharp rise in profit from the trading of investment securities.
The top 10 banks with the highest profits are familiar names, respectively being Vietcombank, Vietnam Technological and Commercial Joint Stock Bank (Techcombank), Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), Vietnam Prosperity Commercial Joint Stock Bank (VPBank), MBBank, Asia Commercial Joint Stock Bank (ACB), BIDV, HCM City Development Commercial Joint Stock Bank (HDBank), Orient Commercial Joint Stock Bank (OCB), and Vietnam International Commercial Joint Stock Bank (VIB).
However, the differentiation in growth also led to a strong fluctuation in banks’ profit ranking. For example, BIDV reported Q1 pre-tax profit at only 1.811 trillion dong, down by 28 percent over the same period of last year, even lower than the profit of ACB, MBBank, VPBank, etc. and only ranked the 7th.
Among the top 10, OCB and VPBank are the ones with the most impressive profit growth with pre-tax profit growth of respectively 106 percent and 63%, reaching more than 1.1 trillion dong and 2.9 trillion dong, respectively. Notably, the profits of these two banks sharply rose but bad debts did not increase or even decreased.
In fact, according to many experts, the business results of banks in Q1 2020 have not been strongly affected by Covid-19 pandemic. The profit decline was mainly due to banks’ active increase in risk provisions to strengthen resources to cope with the risk of bad debts that may form in the future. In Q2, the impact of the pandemic becomes clearer when banks simultaneously reduced interest rates and service fees from April 1st.
Nevertheless, the fact that many banks, including many big banks, experienced profit decline also foreshadowed a difficult year and their sacrifice when the country’s economy faces difficulties due to the disease.
