Econ
Vietnamese banks profitable in the first half of 2017
Vietnamese banks have been lucrative in the first six months of 2017, according to bank financial reports released recently.
Banks’ profit from credit activity has increased considerably in comparison to that of the previous year.
High profit reported
In the first six months of the year, BIDV made a before tax profitof 4,200 billion VND, up 26.23% compared to the previous period, completing 54.5% of the annual plan. Another state owned bank, VietinBank has fulfilled 54% of the annual plan, earning 4,700 billion VND, a 10% increase compared to the same period of last year. Meanwhile, Vietcombank achieved 53.2% of the year plan, with profit before tax reaching 5,054 billion VND, increasing by 20.5% in comparison to the same period in 2016.
Among the commercial banks, SHB announced a benefit of 800 billion VND. Sacombank, a bank that is still in the middle of restructuring, also reported an increase of 70% in profit compared to the same period of last year, reaching 428 billion VND, completing 73% of the annual plan. Eximbank achieved 67% of the annual plan, with the before tax profit of 400 billion VND, a drastic growth compared to to the earnings of 79 billion VND in the same period of last year. TPBank completed 64% of the revenue plan. ACB profit increased by 52%. In particular, the Orient Commercial Bank (OCB) doubled its pre-tax profit, reaching 494 billion VND. Many other banks such as Techcombank, HD Bank or VPBank have not made public their revenues, but have reported high profits in the previous quarter.
Also, in the first six months, the majority of banks have set large loan loss provisions. BIDV’s provision cost is 6,300 billion VND (an increase of 40.21% compared to the same period). MB actively set aside provisions of 1,700 billion VND, an increase of 192%. Besides, the secondary debt market will soon be established, resulting in some unusual profits from the sale of bad debt starting from next year.
Diversifying services
Credit growth, good business operation and improved liquidity give way for the banking sector to be optimistic about the profitability to be achieved in 2017. Besides extending credits, various banks continue to push forward their retailing sale, even banks that have many experiences and traditions in wholesale such as VCB, MB and SHB, etc.
According to the finance report, the business result of MB has increased thanks to the improvement in net interest margin (NIM) and the growth in services. With regard to VCB, the share of small and medium enterprises and personal credit have grown significantly (up by 39% and 38.8% respectively).
According to Vietcombank Securities Limited Company (VCBS), the gap between lending rate and interest rate has significantly reduced in 3 years, and is a lot lower in compared to neighboring countries. The lower the gap, the lesser the marginal benefit banks receive. Therefore, non-credit activities are essential for banking sustainable operation.
Sources from Vietcombank said that in 2017, the retail and individual customer segments are vital for its development, thus the bank will have specific policies to expand this market. On the other hand, Vietinbank will continue developing products and services, especially payment service to improve its competitiveness. VPBank has focused on offering customers unique and suitable financial services to optimize services from lending, saving to international wire transfer and currency exchange.
In the plan to restructure credit institutions in the period 2016 – 2020, the State Bank requires commercial banks to increase service revenue to over 30% by the end of 2020. This direction is suitable in accordance to the global trend. If benefits rely only on credits, banks will encounter with difficulties since credits in Vietnam depend mostly on the real estate market and the health of businesses.
The profit of banks increases sharply thanks to the strong loan growth. In the first half of this year, many commercial banks increased their credit, with the growth rate of many reaching 14 to 15%, while the same period of last year witnessed only one-digit growth. Total system credit in the first half of the year has risen to 8%, a record growth rate in 8 year.
High profit reported
In the first six months of the year, BIDV made a before tax profitof 4,200 billion VND, up 26.23% compared to the previous period, completing 54.5% of the annual plan. Another state owned bank, VietinBank has fulfilled 54% of the annual plan, earning 4,700 billion VND, a 10% increase compared to the same period of last year. Meanwhile, Vietcombank achieved 53.2% of the year plan, with profit before tax reaching 5,054 billion VND, increasing by 20.5% in comparison to the same period in 2016.
Bank operation at VPBank Hanoi.
|
Also, in the first six months, the majority of banks have set large loan loss provisions. BIDV’s provision cost is 6,300 billion VND (an increase of 40.21% compared to the same period). MB actively set aside provisions of 1,700 billion VND, an increase of 192%. Besides, the secondary debt market will soon be established, resulting in some unusual profits from the sale of bad debt starting from next year.
Diversifying services
Credit growth, good business operation and improved liquidity give way for the banking sector to be optimistic about the profitability to be achieved in 2017. Besides extending credits, various banks continue to push forward their retailing sale, even banks that have many experiences and traditions in wholesale such as VCB, MB and SHB, etc.
According to the finance report, the business result of MB has increased thanks to the improvement in net interest margin (NIM) and the growth in services. With regard to VCB, the share of small and medium enterprises and personal credit have grown significantly (up by 39% and 38.8% respectively).
According to Vietcombank Securities Limited Company (VCBS), the gap between lending rate and interest rate has significantly reduced in 3 years, and is a lot lower in compared to neighboring countries. The lower the gap, the lesser the marginal benefit banks receive. Therefore, non-credit activities are essential for banking sustainable operation.
Sources from Vietcombank said that in 2017, the retail and individual customer segments are vital for its development, thus the bank will have specific policies to expand this market. On the other hand, Vietinbank will continue developing products and services, especially payment service to improve its competitiveness. VPBank has focused on offering customers unique and suitable financial services to optimize services from lending, saving to international wire transfer and currency exchange.
In the plan to restructure credit institutions in the period 2016 – 2020, the State Bank requires commercial banks to increase service revenue to over 30% by the end of 2020. This direction is suitable in accordance to the global trend. If benefits rely only on credits, banks will encounter with difficulties since credits in Vietnam depend mostly on the real estate market and the health of businesses.
The profit of banks increases sharply thanks to the strong loan growth. In the first half of this year, many commercial banks increased their credit, with the growth rate of many reaching 14 to 15%, while the same period of last year witnessed only one-digit growth. Total system credit in the first half of the year has risen to 8%, a record growth rate in 8 year.
