Commercial Joint Stock Bank for Investment and Development of Vietnam (HoSE: BIDV) has announced its consolidated financial statement in the second quarter (Q2) of 2019. Accordingly, the bank reported a pre-tax profit of 2.251 trillion dong, down by 9.4 percent compared to Q2 2018.
In the first two quarters of 2019, BIDV attained a pre-tax profit of 4.772 trillion dong, down by four percent compared to the first half of 2018 and completed 46 percent of the profit plan for 2019.
The main reason for this decline is an old reason, which is to set large provisions for risks to handle bad debts. In the first half of 2019, BIDV set aside up to 10.710 trillion dong for risk provisions.
By the end of June 30th 2019, the bank’s on-balance sheet bad debts reached up to 21.210 trillion dong (in which nearly half of that were irrecoverable debts (10.491 trillion dong)), accounting for 1.98 percent of the outstanding loans, compared to the 1.9 percent recorded on December 31st 2018.
In addition, the bank’s profit from credit only slightly increased from 17.46 trillion dong in the first half of 2018 to 17.68 trillion dong in the first half of 2019. Notably, in the first two quarters of 2019, BIDV’s ratio of costs on interest income of BIDV rose to 63.65 percent from 60.5 percent in the same period of last year.
This is partly due to the reduction in the bank’s demand deposits and increase of term deposits from customers. Specifically, as of June 30th 2019, customers’ demand deposits at BIDV were 134.66 trillion dong, down by nearly 10 trillion dong compared to the end of 2018. In addition, customers’ term deposits of BIDV increased from 787 trillion dong (as of December 31st 2018) to 870 trillion dong (up by about 83 trillion dong) by the end of Q2 2019. Demand deposits are often cheap capital source with a maximum interest rate of one percent, while banks often have to pay higher interest rates for term deposits.
As of June 30th 2019, BIDV’s total assets were more than 1,400 trillion dong, up by nearly seven percent compared to the beginning of the year. The bank’s total mobilisation reached nearly 1,060 trillion dong, up by seven percent compared to the beginning of the year, and its lending grew by 7.5 percent with outstanding credit reaching more than 1,050 trillion dong.
