By the end of September, credit growth of the 14 listed banks was 11% year-to-date, implying that total credit growth of those banks in the third quarter was approximately two percentage points, according to Vietnam Dragon Securities Company (VDSC).
Meanwhile, state-owned commercial banks still had positive credit growth compared to the average of listed banks, with Bank for Investment and Development of Vietnam (BIDV), Bank for Foreign Trade of Vietnam (VietinBank) and Vietnam Commercial Bank for Industry and Trade (Vietcombank) gaining 4.9, 2.6, and 3.5 percentage points in the July-September quarter, respectively.
Besides their role as commercial banks, state-owned banks also have duties supporting the State Bank of Vietnam (SBV) in stabilizing the monetary market. Therefore, it is possible that a large amount from these banks was lent to important sectors at low interest rates. To compensate, somehow, the amount of deposits from the State Treasury in these three banks also increased sharply, more than 16% compared to the end of June 2018.
Profit-before-tax (PBT) of these banks grew more than 28% year-on-year in the first nine months of 2018. Excluding Vietnam Prosperity Bank (VPBank), most banks fulfilled more than 75% of their PBT target for the year. However, the sum of total operating income (TOI) of those banks grew 22% year-on-year, lower than the growth of PBT. This implies that the profit growth in 2018 was mainly due to lower expenses, especially provision expenses which significantly decreased in some banks like Asia Commercial Bank (ACB) and Vietnam Technological and Commercial Bank (Techcombank).
Some banks reported high earnings growth due to income from bancassurance up-front fees or divestments. Meanwhile, net interest income (NII), which contributes more than 70% to bank earnings grew a mere 16%. Given that the SBV will gradually slow down credit growth in the upcoming years, VDSC expected the growth of NII will be even lower than of 2018.
Therefore, it is predicted that banks with high growth in 2018, mainly due to the reduction of provision costs and one-off earnings, will be unlikely to maintain such levels in 2019. Some banks, which have bought back all of their special bonds in 2018, are still likely to record high earnings growth in 2019. The picture for profit growth of banks will generally be uneven in 2019.
It is expected that around VND391 trillion (US$16.76 billion) of credit could flow into the economy in the last quarter of 2018. Considering the lending amount in the fourth quarter of previous years, such an amount will be enough to meet the entire demand of the economy in the fourth quarter of 2018, stated VDSC. Hence, VDSC believed the credit growth for 2018 will be around 16.5 - 17%.
