Banks post impressive profit growth in H1 2018

Many banks have reported impressive profit growth in the first half off 2018. - Photo cafef.vn

Nghiem Xuan Thanh, chairman of State-owned Vietcombank, said that by the end of June, his bank surpassed half of the profit target set for the year.

In the first half of this year, Vietcombank’s pre-tax profit rose to more than VND7.72 trillion (US$340 million), up 52.7 per cent year-on-year and equivalent to 55.2 per cent of the bank’s annual target.

Vietcombank’s other financial indicators of net interest margin (NIM), return on average asset (ROAA) and return on average equity (ROAE) also improved sharply against 2017. Accordingly, VCB’s NIM reached 2.76 per cent, ROAA 1.24 per cent and ROAE 22.71 per cent.

Pham Manh Thang, deputy general director of Vietcombank, said that taking into account Vietcombank’s business performance in the first six months and its positive prospects, the bank is expected to exceed all targets set for this year.

The results are thanks to a shift in the bank’s investment focus away from wholesale banking services and towards the retail banking segment, while non-performing loans (NPLs) were tamed below the permitted threshold of 3 per cent, Thang added.

Bank for Investment and Development of Vietnam (BIDV) also reported acceleration in performance in H1 with a strong profit surge of 24.7 per cent to VND4.05 trillion, equal to 54 per cent of its annual target.

Bank for Industry and Trade of Vietnam (VietinBank)’s profit in H1 also increased by 8 per cent year-on-year to VND5.2 trillion, following more efforts put into tackling NPLs.

Le Duc Tho, general director of VietinBank, said during the first half of this year, VietinBank repurchased its entire bad debts that it previously sold to Viet Nam Asset Management Company (VAMC).

Tho said that his bank was on track to achieve its target set for 2018, especially in capital mobilisation, which is higher than the average growth rate of the banking industry.

Business performance of private commercial banks in the first half of this year also witnessed impressive results.

Vietnam International Joint Stock Commercial Bank (VIB) reported pre-tax profit of VND1.15 trillion, up three times from the same period of 2017. Contributing the most to the profit growth of VIB in H1 was the operation of retail banks with revenue increasing 100 per cent from the same period last year.

VIB’s credit quality in the period also improved with its provisioning costs maintained at a low level of VND234 billion despite a 8.94 per cent credit growth.

VPBank’s after-tax profit also surged sharply by 34 per cent against the same period last year to more than VND4.37 trillion. By the end of the second quarter, the bank’s return on asset (ROA) and return on equity (ROE) were at 2.46 per cent and 22.36 per cent, respectively.

Tien Phong Joint Stock Commercial Bank (TPBank) reported pre-tax profit at VND1.02 trillion in H1, a rise of 121 per cent year-on-year and exceeding its six-month target by 12 per cent.

As of the end of June 2018, TPBank also had total assets of more than VND126.5 trillion while its charter capital increased to VND6.718 trillion, up VND876 billion.

Economist Nguyen Tri Hieu attributed the bank’s impressive profits in the first half of this year to the high credit growth, the improvement from the retail banking segment and the country’s high economic growth.

Hieu forecast that banks’ profits would rise further in the remaining months of the year.

A recent survey by the State Bank of Viet Nam also showed that a majority of commercial banks expect an upward trend in their business in the remaining months of the year.

According to the business sentiment survey, which covered domestic and foreign commercial banks operating in the country, 76.1 per cent of respondents expected better results in the third quarter, while 82.6 per cent hoped their business performance throughout 2018 would improve further compared to last year. Of this, 20.7 per cent and 32.6 per cent anticipated “significant improvement” in Q3 and the entire year, respectively.

Eighty-eight per cent of the respondents predicted their pre-tax profit in 2018 would rise compared to last year, helping the average growth rate of the entire banking system to reach 19.05 per cent, higher than the 18.2 per cent forecast in the previous survey conducted in May.