Many banks have reported good business performance in the first nine months of 2018 (Photo: VIB)

Hanoi (VNS/VNA) – Many banks have reported good businessperformance in the first nine months of the year thanks to decreasing provisioncosts and rising income from services.

According to the consolidated financial statement of Joint Stock CommercialBank for Foreign Trade of Vietnam (Vietcombank), its net profit in the firstnine months of the year was 16.68 trillion VND (712.86 million USD), up 34 percentagainst the same period last year.

Thanks to a decline in provision costs for risky loans from 36.2 percent to29.9 percent, the bank’s pre-tax profit in the period surged by 47 percentyear-on-year to 11.68 trillion VND, surpassing the pre-tax profit gained in thewhole of 2017.

Vietcombank’s impressive result was also thanks to a high growth in thebank’s two core business segments, of which net profit from credit rose by 26percent to 2.04 trillion VND and net profit from services surged by 34 percentto 2.63 trillion VND.

Vietcombank’s outstanding loans in the first three quarters rose by 15.6 percentto 627.95 trillion VND while mobilised capital reached 773.4 trillion VND. Thebank’s non-performing loan (NPL) ratio accounted for 1.18 percent of the totaloutstanding loans.

Military Bank also reported acceleration in performance in the first threequarters with an impressive pre-tax profit of 6 trillion VND, double the sameperiod last year. The bank’s profit from services contributed 1.69 trillion VND.

Vietnam International Bank (VIB)’s pre-tax profit in the period alsoskyrocketed by 176 percent year-on-year to 1.72 trillion VND, following greatefforts put into tackling NPLs. VIB was among few banks that resolved all baddebts at the Vietnam Asset Management Company (VAMC) in July so that it didn’thave to spend provision costs on the bad debts. 

The nine-month result for Tien Phong Bank (TPBank) also came out at 1.61trillion VND, also doubling last year’s figure and achieving 75 percent of its2018 target.

TPBank’s representative believed that the bank was confident of meeting itsgoals this year, on the back of very strong business activities.

Smaller banks also posted high profits in the first three quarters. An BìnhBank (ABBank)’s pre-tax profit surged sharply by 54 percent against the sameperiod last year to more than 658 billion VND while Vietnam Thuong TinCommercial Joint Stock Bank (VietBank) also reported pre-tax profit of 301.6billion VND, nearly four times higher than the same period of 2017.

Analysts at Ho Chi Minh Securities Company (HSC) estimated that total profitsof listed banks in the first three quarters would increase by 41 percentyear-on-year. This forecast is based on the assumption that credit growth inthe period was only 11 percent.

According to HSC, credit growth in the last three months has slowed afterrising quickly in the first half due to concerns over inflation. The State Bankof Vietnam (SBV) instructed banks to control lending to high risk sectors suchas real estate, consumption and securities.

However, with low credit growth, lending interest rates are on an upward trend,which may improve banks’ net interest income (NIM), HSC noted. After severalmonths of remaining unchanged, lending rates started to rise in the last twomonths, leaving the rate to be 0.46 percentage points higher than by the end oflast year.

Apart from this factor, the increase in non-interest income, irregular incomeand declining provision expenses contributed to the overall profit increase.

According to HSC, non-interest income of banks also tends to increase sharplythanks to increased service income and the contribution of new income streamssuch as insurance commissions.

Meanwhile, provision costs are on a downward trend. Based on HSC’s roughestimation, the overall provisioning expense for listed banks rose by only 10per cent in the first nine months.

Pham Hong Hai, general director of HSBC, also attributed the bank’s highprofits in the first three quarters to a decrease in provision costs for NPLsof the banks, adding that NPLs at the banks reduced significantly compared 💦withlast year thanks to their efforts in dealing with bad debts.-VNS/VNA