Although banks have not announced the 2019 half-year business results, the early signs have revealed the ranking of banks with the highest profit.
Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) is certainly the leader. In the first quarter (Q1) 2019, the bank reported a pre-tax profit of 5.878 trillion dong, up by 34.8 percent compared to the same period of 2018, continuing the uptrend in 2018 with a record high profit of 18 trillion dong. In 2019, Vietcombank targets a profit of 20 trillion dong, equivalent to about five trillion dong a quarter.
In addition to the high profit goal this year, Vietcombank also plans to issue shares to distribute dividends to existing shareholders from the capital surplus and retained profitensuring the issuance conditions to not depend on the stock market in order to increase capital by more than 14.8 trillion dong to 51.9 trillion dong. Most of the capital collected under the issuance plan will be financed for bank loans, further loosening the pressure compared to the other banks as Vietcombank already has high Capital Adequacy Ratio (CAR) and has received approval for applying the Basel II standards. It means that Vietcombank will have dual advantages in credit growth.
In addition, Vietcombank also has the lowest bad debt ratio and is the first bank to clear off all the bad debts at Vietnam Asset Management. For its safe operation, good asset quality, the first position in profit in the first half of 2019 and the profit target of a billion US dollars this year are not really far from the reach of Vietcombank.
If Vietcombank outstands with the indicators and also the foundation and governance in the group of state-owned banks, in the group of private joint stock banks, Vietnam Technological and Commercial Joint Stock Bank (Techcombank), Asia Commercial Joint Stock Bank (ACB), HCM City Development Commercial Joint Stock Bank (HDBank) or Military Commercial Joint Stock Bank (MBBank), etc. are the notable names in profit level and high growth rate in the first half of the year.
In particular, Techcombank has a strategy to attract CASA (current and savings account ratio) low-cost non-term deposits by stimulating customers to use free services and serve customers who are associated with almost monopoly private corporations which are Vingroup and Masan. The bank has recorded revenue growth for 14 consecutive quarters with 4.2 trillion dong and 2.6 trillion dong of pre-tax profit in Q1 2019. It is having a momentum to make better break through, ensuring the target of 11.750 trillion dong set for the whole year.
Supporting for the realisation of the above figure, in addition to the rapidly growing balance sheet and the declining mobilisation costs, Techcombank also has a large advantage from the contribution of issuance consulting services and corporate bond proprietary trading. This part offsets the reduction of outstanding loans to big customers, directly contributes to the revenue and consolidated profit of Techcombank.
From the perspective of the banking ecosystem, HDBank is dominating in data and a chain which exclusively serves more than 20 million direct customers at HDSaison and Vietjet. This number is double if adding the data of energy and retail groups.
The latest data showed that HDBank has the lowest bad debt ratio in the whole system, the bank’s asset quality is good with lending methods aiming at ecosystem members with stabile income and high rating. More than 90 percent of the bank’s lending portfolio are secured. In addition to efficient lending, HDBank’s non-interest income in 2018 grew by up to 123 percent over the previous year, and is expected to be stronger when the bank’s subsidiary HDSaison is approved to provide foreign exchange trading services as scheduled.
HDBank HDSaison and Vietjet have launched instalment loans for buying air tickets, promising new CASA amounts flowing through HDBank every day, which adds an advantage for the bank to develop the segments of Small and medium-sized enterprises and services. HCM City Securities Company (HSC) forecasted that HDBank has the basis to continue to rank at the top of the profit ranking in the whole system with a double-digit profit growth rate, as it did in five years from 2013 to 2018.
In Q1 2019, HDBank attained a consolidated operating income of 2.466 trillion dong and a pre-tax profit of 1.101 trillion dong, showing that the bank continued to achieve high operational efficiency with Return on Equity (ROE) of 20.4 percent and Return on Assets (ROA) of 1.7 percent, being in the leading group.
The remaining banks which were recorded positive profitability in 2018 and Q1 2019, such as ACB, MBBank, etc. also expect a lot on the Q2 results which are about to be announced. This is because these banks all have plenty of room to growth, notably thanks to the early completion of the Basel II, the abundant source of capital, the full settlement of bad debts at VAMC (MBBank) and the settlement of all debts of the six companies involved its former founder Nguyen Duc Kien which slowed down the bank’s growth rate in the previous years (ACB).
In Q1 2019, ACB recorded more than 1.7 trillion dong of pre-tax profit, while that of MB was more than 2.4 trillion dong. As expected, ACB will earn more than 7.2 trillion dong of profit in the whole year 2019, while MBBank sets an ambitious goal of nearly 9.9 trillion dong.
The first names in the top-notch profit ranking are predictable. However, according to analysts, in addition to the foundation activities that have been seen in the past time, the investment in technology and ecosystem is increasingly showing competitive advantages. The profit growth race of banks perhaps will be more unexpected towards the end of the year.
