In the first half (H1) of 2020, Vietnam Technological and Commercial Joint Stock Bank (Techcombank, HoSE: TCB) recorded a pre-tax profit of 6.737 trillion dong, 19 percent higher than the same period of 2019. This figure is lower than the 34 percent growth of the profit before provisioning (7.984 trillion dong). This is because the bank’s credit provision expenses rose by fivefold compared to the same period, reaching 1.211 trilion dong.
Along with the above change, the bank’s bad debt declined by 32 percent compared to the beginning of the year, reaching 2.1 trillion dong. In particular, the group 5 debts dropped by 1.6 trillion dong to 903 billion dong. Techcombank’s bad debt ratio decreased from 1.33 percent to 0.91%.
Speaking at the meeting with an analyst, leader of Techcombank said that the rising provisioning expenses is not a problem because the bank aims to speed up the settlement of bad debts. The leader also said that 3.6 percent of the bank’s outstanding credit has been restructured and offered deferred interests. The rescheduled debts are mainly in the group 1 debts.
Regarding business activities, Techcombank recorded a growth of 57 percent in net profit from service activities in H1, reaching 1.974 trillion dong. In which the income from fees increased by 47%, mainly thanks to the increase of guarantees of bonds and other activities, reaching respectively 146 percent and 237%.
The trading of investment securities also recorded positive development with over fourfold increase to 792 billion dong. According to Techcombank’s leader, the proceeds from this activity are mainly government bonds. When seeing an opportunity, the bank can use its excess liquidity to buy/sell government bonds. This activity is not the core business of the bank but is its most effective tool to manage the balance sheet.
Regarding credit growth, the bank determines that real estate and personal loans are still the focus, which achieved increases of respectively 44 percent and 30 percent in H1 2020. In particular, home loans accounted for 44 percent of the outstanding retail credit structure. In the first two quarters of the year Techcombank’s credit growth was 2.7%. Specifically, its outstanding loans to customers only increased by 0.3 percent to 231.665 trillion dong.
