Profit down in Q3, likely to pick up in Q4: Vietnamese banks

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The headquarters of the State Bank of Vietnam (SBV) in Hanoi. PRESS AGENCY IN VIETNAM

Vietnamese commercial banks saw lower profits in the third quarter of the year, with the underlying cause being the fourth outbreak of the novel coronavirus, which resulted in lockdowns in the country’s main cities and provinces, according to the latest. State Bank of Vietnam report. (SBV).

In a recent survey conducted by the SBV, 54% of commercial banks and financial institutes said they expected business to pick up in the last quarter of the year.

Forecasts from SSI Securities Corp (SSI) show that profit in the third quarter of the year for Vietnam International Commercial Joint Stock Bank (VIB) could fall due to the bank’s restructuring efforts to support borrowers, despite positive credit growth of 11% since the start of the year.

In addition, the revenue generated by bancassurance, which typically accounts for around 20% of the bank’s profits, was hit hard during the lockdown period.

As a result, the bank’s forecast for the quarter was 1.3 trillion dong (US $ 57.5 million) in pre-tax profit, down 16 percent from the same period l ‘last year.

Some commercial banks have not released their business performance for the quarter, while market analysts said most banks will produce weaker figures compared to the first two quarters of 2021. Factors contributing to the decline of the profits included lower interest rates, lower demand and lower asset quality. As demand has shown signs of picking up and the virus outbreak has been brought under control, the situation is expected to improve by the end of the year.

Vietnam Technology and Commercial Joint-stock Bank (Techcombank) profit is expected to reach 5.2 trillion dong, up 35.7% year-on-year with 16% credit growth year-to-date , according to SSI.

SSI also forecast an increase in profits for Military Commercial Joint Stock Bank (MB) and Vietnam Prosperity Joint-Stock Commercial Bank (VPBank).

Tien Phong Commercial Joint Stock Bank (TPBank) said its credit growth for the first nine months of 2021 was 15% with a bad debt rate of just 1.02%, significantly lower than last year. at 1.43%.

The bank said it was over 75% of its annual profit target, which it previously said to be around 5.5 trillion dong for 2021.

“Our performance is a testament to TPBank’s ability to adapt and adopt new adjustments to support the growth of the company,” said Managing Director Nguyen Hung.

Profit, however, should not be the only measure used to reflect the performance of financial institutes, said Vietnamese Bank Association general secretary Nguyen Quoc Hung.

Hung said that before the outbreak, financial institutes made great efforts to reduce their bad debt ratio. Progress has been made, especially since the introduction of government decree 42 – a decree that facilitates the sale of guarantees and the recovery of capital. However, the fourth outbreak and the widespread lockdown put a large number of businesses at risk.

“We will see an increase in the bad debt rate in the banking sector in the near future. As banks have to divert their resources to solve such problems, their profits are likely to suffer,” he said.

SBV vice governor Dao Minh Tu said financial institutes should continue to support the business community and the public.

“In order to keep interest rates down, banks need to find a way to cut spending in other areas,” Tu said.

Since the start of 2020, the SBV has cut interest rates three times in an effort to help businesses access more affordable finance and get back on their feet. As a result, the average interest rate for banks in the country has fallen 1.55% from pre-pandemic levels.

According to the SBV, the banks cut their interest rates by 26 trillion dong from January 2020 to the end of August 2021.

Commercial banks cut interest rates by more than 8.8 trillion dong from July 15 to August 31 to support businesses hard hit by the novel coronavirus.

VIET NAM / ASIA NEWS NETWORK


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