The Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank, CTG), has published the financial statement in the second quarter (Q2) of 2020. Accordingly, as of June 30th 2020, the bank’s capital mobilisation increased by 2.35 percent and lending grew by 0.66%. this growth was better than the negative growth until the end of May 2020, but is not sufficient to save the bank’s core business.
The total interest income of VietinBank was slightly up in Q2. Due to the higher interest expenses, the bank’s net interest income only reached 7.798 trillion dong, down by 5.2 percent compared to the same period of 2019.
Nevertheless, other business segments of the bank recorded fairly good growth, maintain a stable profit level. Specifically, the bank’s net profit from service activities was 1.102 trillion dong, up by 11.7 percent over the same period of 2019. The net profit from foreign exchange trading was 643 billion dong, up by 72.8 percent over the same period of last year. The net profit from trading of securities reached nearly 126 billion dong, up by 26 times compared to the same period of last year.
Thanks to the sharp rise of non-interest businesses and the cut in operating costs, VietinBank’s net profit from business activities in Q2 reached 6.693 trillion dong, up by nearly six percent compared to the same period of last year.
The main reason for VietinBank’s significant profit increase in Q2 2020 is the strong reduction of credit risk provisioning costs. Thanks to that, the bank’s pre-tax profit in the quarter doubled to 4.485 trillion dong compared to the 2.182 trillion dong recorded in the same period of last year.
The decline in credit risk provisions is also the reason for VietinBank’s sharp rise in profit compared to the same period of 2019.
From the beginning of the year, VietinBank’s net interest income only rose by 0.2 percent compared to the same period of 2019, reaching 16.216 trillion dong. The non-interest business activities of VietinBank recorded good results. The net profit from service activities of the bank increased by 10.5 percent in the first half of the year, reaching 2.1616 trillion dong. The net profit from foreign exchange trading grew by 31.7 percent to 1.036 trillion dong. The profit from trading of business securities increased by up to 185 percent to 389 billion dong, while the trading of investment securities recorded 135 billion dong of profit, while it was a loss of 243 billion dong in the same period of last year. The profit from other activities increased fairly sharply by 36 percent to 470 billion dong.
Compared to the same period of last year, the business profit before risk provisions of VietinBank in the first two quarters of the year reached 14.060 trillion dong, up by 10%. If including the provision expenses of 6.6 trillion dong (down by 10.6%), the bank’s consolidated pre-tax profit reached 7.460 trillion dong, up by 40 percent compared to the same period of 2019.
As of June 30th 2020, VietinBank’s on-balance sheet bad debt ratio was 1.7%. However, the issue is the sharp increase of the bank’s group 3 debts with over 7.155 trillion dong, up by nearly 3.5 percent over the beginning of the year.
In the first half of 2020, VietinBank acquired more than six trillion dong of debts sold to Vietnam Asset Management Company (VAMC), raising the total value of debts purchased from the time of debt sale in December 2018 until now (after about 1.5 years) to nearly 6.8 trillion dong (accounting for more than half of the original face value). The bank is yet able to complete the acquisition of all bad debts at VAMC as expected.
