A provisional reimbursement has helped Baoviet Holdings post a soaring profit in the first half of this 2012 in stark contrast to its core business.
The financial-insurance group’s pre-tax profit jumped by VND362 billion ($17.5 million), or 54.4 per cent, year-on-year to VND1.03 trillion ($49.8 million) within 2012’s first half. Revenue just modestly increased 10.2 per cent to VND7.72 trillion ($373 million), according to its audited consolidated financial statement for 2012’s first half.
The jump in profit was thanks to a provision reimbursement of more than VND130 billion ($6.3 million), which reduced more than VND500 billion ($24.1 million) year-on-year in financial expenses for the group. Bao viet in 2011’s first half had to set aside more than VND380 billion ($18.4 million) for financial provisions.
Such reduced expenses helped Baoviet post a VND1.11 trillion ($53.6 million) profit from financial activities, although financial income stayed almost unchanged.
Among Baoviet’s financial activities – which mainly investments and securities businesses, its securities arm Bao Viet Securities posted a robust performance. The brokerage firm made a considerable profit in 2012’s first half, after painful making losses or post little profits throughout last year.
But Baoviet’s core business, insurance, showed a very modest performance. Its insurance operations saw bigger operating loss of VND227.3 billion ($11 million), up from VND138 billion ($6.67 million) in 2011’s first half, due to a surge in selling expenses and in general and administrative expenses of insurance operation.
Particularly, claim expenses for reinsurance doubled, while recoveries from reinsurance dropped.
Meanwhile, banking operation contributed just a modest profit of VND268 billion ($12.9 million) within the period compared to VND224 billion ($10.8 million) in 2011’s first half.
Baoviet cash and equivalents reduced to VND4.2 trillion ($202.9 million) from VND5.5 trillion ($265.7 million) in last year’s corresponding period. Among them, its cash deposited in banks soared to VND1.8 trillion ($87 million) from just VND457 billion ($22.1 million) in 2011’s first half.