Lenders manifest steady trajectory with profit figures

April 25, 2023 | 13:00
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Although first quarter business results of banks show deceleration compared to the final quarter of 2022, in the current macro context, this still is an encouraging growth.

The first bank to publish its financial statements in Vietnam was PGBank, which recorded a Q1 pre-tax profit at VND153 billion ($6.5 million), up 21 per cent over the same period. As of March 31, 2023, PGBank’s total assets were down 5 per cent compared to the beginning of the year, mainly due to the bank’s reduction in lending to other credit institutions and a decrease in its investment securities portfolio.

Outstanding loans to customers increased by 0.3 per cent, while customer deposits expanded by 4.8 per cent.

Lenders manifest steady trajectory with profit figures
There was an improvement in banking business in Q1, but the improvement rate has slowed compared to the previous quarter, Photo: Dung Minh

According to PGBank’s financial report, its net interest income increased by 44.5 per cent compared to the first quarter of 2022, mainly thanks to the growth of interest income from customer loans. Moreover, profit from services increased by 32 per cent, and profit from foreign exchange rose by 32.4 per cent.

Meanwhile, investment in securities trading did not record any profit/loss in the first quarter.

According to Nguyen Duc Vinh, general director of VPBank, by the end of March, the bank achieved more than VND4 trillion ($170.16 million) in profit, with credit growth of 7 per cent and deposit growth of 11.5 per cent.

While profit figures are still near the top, VPBank has only reached about 20 per cent of the plan for the first quarter of 2023. Meanwhile, subsidiary FE Credit continues to suffer losses.

“VPBank has two strategic segments, small- and medium-sized enterprises and retail, which are still growing despite challenges. The bank plans to shift its focus to medium and large enterprises and also plans to expand its services to foreign-invested enterprises,” Vinh explained.

“We will introduce technology platforms to support individual customers and develop digital banking to attract more customers. Additionally, the bank’s securities company is expected to contribute significantly to profits after recent capital increases,” he added.

Elsewhere, Eximbank’s general director Tran Tan Loc informed that the bank’s pre-tax profit was estimated at over VND900 billion ($38.3 million), up 16 per cent over the same period last year.

Tu Tien Phat, general director of ACB, said the consolidated Q1 profit reached VND5.1 trillion ($217 million), up 24 per cent over the same period and reaching 26 per cent of the full-year plan.

Phat said that despite being affected by the economic slowdown, the bank’s management is confident of completing the annual plan, along with appropriate credit and deposit growth.

“Credit growth has shown signs of recovery since March, which has helped the bank complete 26 per cent of the profit plan. This is an encouraging result for a retail bank,” Phat said.

In the same vein, SHB’s general director informed that the bank’s pre-tax profit in Q1 reached more than VND3.5 trillion ($149 million), up about 10.3 per cent over the same period in 2022. With this result, SHB completed about 35 per cent of its profit target for the year.

Explaining where the Q1 profit results came from, the general director of SHB said, “SHB continued to promote its retail strategy and increase service revenue. The digital transformation strategy is promoting efficiency and helping to optimise operations.”

It was reported that groups involved in almost one-quarter of the total capitalisation value of Vietnam’s stock exchanges have estimated or officially announced their profits for Q1.

According to FiinTrade, profit after tax Q of 10 banks representing 70 per cent of banking industry capitalisation was estimated to have increased by 14 per cent over the same period the previous year. Notably, the profit after tax of 10 banks increased by 17.8 per cent compared to the previous quarter.

FiinTrade added that profit growth from the group of state-owned banks was supported by increased credit and sustained net interest margins. As for BIDV, the reduced provisioning pressure also helped the bank improve its profit in the first quarter.

For joint-stock banks, with the exception of those with a high proportion of loans to the real estate sector (including TCB) whose profits decreased due to the increase in provision for credit risks, most of them made profits. Q1’s profit after tax is estimated to grow over the same period, led by STB (+57 per cent) and ACB (+24.6 per cent). However, credit growth has been very low or even decreased in some retail banks (including ACB and VIB).

On the stock market, the prices of banks with high profits in the first quarter, including BID, ACB, and STB, are now at a peak after one year – a strong recovery by 40-60 per cent compared to the middle of November last year.

According to survey results from the Department of Forecasting and Statistics at the State Bank of Vietnam, there was an improvement in the business situation of the banking system in Q1, but the improvement rate has slowed compared to the previous quarter. Credit institutions assessed that the pre-tax profit of the banking system has grown in Q1 but not as much as expected.

However, 67-80 per cent of credit institutions expect their business to improve in the second quarter and the whole of 2023. Nearly 90 per cent of them expect profits in 2023 to grow positively compared to 2022. Furthermore, 5.7 per cent are still worried about negative profit growth in 2023 and 5.7 per cent of credit institutions estimated unchanged profit.

The survey report added that demand in the economy for banking products and services, together with customer’s business and financial conditions, are expected to be the most important objective factors to help improve the banking sector situation for the remainder of the year.

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