The Hanoitimes - An impressive profit growth rate at 52% is considered a short term achievement and not sustainable, due to the large contribution of high expenses.
Specifically, total revenue from banking services has increased 35% compared to the same period of last year, but total expenditure (excluding provision) only grew at 16%, said Saigon Securities Incorporation (SSI)'s quarterly business report.
Banks that have such a high difference between revenue and expenditure are BIDV, HDBank, TPBank and EximBank, while in previous year, that difference is almost negligible, making this year high growth unlikely to be repeated.
Banking's profit has increased 52% in first quarter.
After-tax profit of 12 listed banks has increased 52% compared to the same period of last year, and higher than the growth rate of 36% in 2017.
Notably, a number of banks has witnessed a double or even triple profit growth rate such as ACB, HDBank, TPBank and Eximbank, while Vietcombank has posted a growth rate of 59% in profit.
The report also noted a high growth rate in profit from brokerage, capital contribution and share purchases, mainly thanks to high bond yields and positive performance of the stock exchange in first quarter.
However, as interest rate is growing in second quarter and a slump in the stock exchange, those source of profits will not be maintained for a high growth rate in the remaining months of the year.
Two main sources of banks' revenue coming from profit (up 26%) and service fee (up 30%) are on track for steady growth ,said SSI. Provision for credit risks is expected to be low in 2018 but turned out to be the opposite at 50% growth, mainly due to BIDV of 156% and VPBank of 57%.
Provision of Vietcombank stood at 7% growth rate, while that number of ACB and TPBank have reduced compared to the same period of last year.
With such business result in the first quarter, SSI assessed the profit growth rate of banking sector in the remaining quarters will back in range of 20 - 30%.
The total assets of the banking sector exceeded VND10,000 trillion (US$441 billion) as of December 31, 2017, the latest report of the State Bank of Vietnam (SBV) revealed.
With regards to own capital, as at December 31, 2017, state-owned commercial banks are behind joint stock commercial banks--VND254.6 trillion (US$11.2 billion) against VND290.6 trillion (US$12.8 billion)--posting growth rates of 10.96% and 14.35%, respectively, compared to the beginning of the year.
The chartered capital of state-owned commercial banks in last year was slightly unchanged (up 0.82%) at VND147.7 trillion (US$6.5 billion), while that of joint stock commercial banks reached VND214 trillion (US$9.4 billion), 1.5 times higher than that of state-owned commercial banks.