Currently, nearly all listed banks had published semi-annual financial statements of 2020 with not-so-bad results, even with high growth. However, according to experts, the impact of the disease was delayed and still complicated, so the current figures had not shown all difficulties.
The Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)’s consolidated financial statements for Q2/2020 said that during the period, the bank’s total operating revenue reached nearly 9.975 trillion dong, equivalent to the same period last year. In which, net interest income, which came from loans to customers and businesses, decreased by five percent to 7.8 trillion dong, but net interest from service activities increased by 12 percent to 1.1 trillion dong.
Along with a sharp drop in operating costs and risk provisions, VietinBank achieved nearly 4.5 trillion dong in profit before tax in Q2/2020, doubling the same period in 2019. It was known that in Q2, operating expenses of the bank decreased by nearly 10%, while the provision for credit losses declined by nearly 50%. In the first six months of this year, VietinBank’s consolidated profit before tax estimated at 7.46 trillion dong, up 40 percent compared to the same period of 2019.
At Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank), ending the first two quarters of the year, the profit before tax was at 1.004 trillion dong, fulfilling 59 percent of the 2020 plan (1.7 trillion dong), but compared with the same period of 2019, which decreased by 10%. Particularly in Q2/2020, LienVietPostBank increased the provision for credit losses to more than 253 billion dong, up to 450 percent over the same period in 2019. This was the main factor that made the bank’s profit decline after six business months. Accordingly, pre-tax profit in Q2/2020 decreased by nearly 34 percent over the same period, to 400.6 billion dong.
Tien Phong Commercial Joint Stock Bank (TPBank)’s semi-annual business results in 2020 recorded a pre-tax profit of 2.034 trillion dong, up 26 percent over the same period of 2019. As of June 30, 2020, the total balance of bad debt groups reached 1.476 trillion dong, an increase of 19.6 percent compared to the end of 2019 (1.235 trillion dong).
Increasing bad debt forced TPBank to raise the provision for credit losses in the last two quarters, respectively 324 billion dong and nearly 442 billion dong. Accordingly, the bank’s total credit risk provision expense grew by nearly 766 billion dong, equivalent to an increase of approximately 50%.
Talking to the Securities Investment Newspaper, a senior Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) executive said that the prudence in hedging was reflected in the bank’s increase in provision expenses. In the first half of this year, the VPBank consolidation’s provision expenses, if excluding the provision for Vietnam Asset Management Company (VAMC) bonds of last year, increased by 8.6%, this ratio in VPBank alone was nearly 30.4%.
However, VPBank’s consolidated profit before tax in the first six months still reached nearly 6.6 trillion dong, equivalent to 64 percent of the year plan. In which, the Parent Bank contributed nearly 4.2 trillion dong, accounting 64 percent total consolidated profit before tax. Notably, VPBank’s credit growth in the first two quarters reached 9.8%, of which in bank individually reached 12.7%. If compared with the increase of less than three percent of the whole system, this was clearly an impressive figure in the context of the market affected by the Covid-19 epidemic.
Vietnam Technological and Commercial Joint-Stock Bank (Techcombank) said that the profit before tax in Q2 was 3.616 trillion dong, up by 19%, lower than the new growth of nearly 23 percent of operating revenue due to the credit risk provisions of over 439 billion dong, which was six times higher than the same period. Accordingly, the provision for credit losses in the first six months of 2020 climbed to 1.2 trillion dong, while that of the same period was only 239 billion dong. However, thanks to the sharp decrease in bad debt, profit before tax in the first six months of Techcombank rose by 19 percent to over 6.7 trillion dong.
According to Techcombank’s financial report, the bank had spent 1.7 trillion dong to handle risks in the first half of this year, while the figure of the same period last year was just over 90 billion dong. As a result, the non-performing loan ratio (NPL) by the end of Q2 dropped to below one percent. In particular, the size of Group-five debt decreased by 65 percent compared to the end of 2019, to over 900 billion dong.
At another, by the end of the first six months of 2020, Vietnam International Commercial Joint Stock Bank (VIB) achieved total revenue of 4.815 trillion dong, profit before tax of 2.356 trillion dong, completing more than 52 percent of the yearly profit plan. However, the Q2/2020 financial report showed that the total bad debt group increased by 27.6 percent compared to the end of 2019, to 3.267 trillion dong. Increasing bad debt was the reason why VIB had to set aside more than 421 billion dong of credit risk provisions in the past six months, an increase of 31.7 percent compared to the total provision of the same period of 2019 of 320 billion dong.
Sharing with Securities Investment Newspaper, Nguyen Tri Hieu, an economist, said that the high provision costs showed the fact that banks were always cautious and had created a financial foundation to prevent risks that might arise when the economy was in an unpredictable stage.
Can Van Luc, the chief economist of Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), said that the finance banking and insurance sector maintained a growth rate of 6.78 percent in the first six months (up 7.4 percent compared to Q1). It should be noted that the impact of the Covid-19 pandemic on banking and financial activities was often delayed, as customers, including depositors, borrowers, service users, started to gradually reduce services over time when entering difficulty. The situation of poor capital absorption and non-performing loans was likely to increase sharply after that.
Accordingly, credit of credit institutions was forecast to increase by eight percent to 10%. The NPL would increase rapidly, might reach four percent and the gross NPL would increase to around six percent by the end of 2020, then could grow to even higher point in 2021 when Circular 01 expired and bad debt group must be transferred, Luc assessed.
According to senior management of a joint stock bank, the business results of the first six months of credit institutions had not contained any surprises.
The reason was that low net interest income (due to low credit growth) could be offset by low provision expense, if the bank delayed recognition of provision for loans, as allowed by the State Bank of Vietnam. However, this was only an accounting entry. The banking industry was unavoidably negatively affected in the context that the prospects for the whole economy were not positive. The story there was when these negatives would be revealed.
