Vietnamese banks saw a strong divergence in third-quarter profits, with many reporting growth thanks to a sharp reduction in credit risk provisioning costs.
Data collected by The Investor shows that the total profit of 27 listed banks reached VND47.36 trillion ($1.93 billion) in Q3 and VND150.44 trillion ($6.12 billion) in the first nine months, down 1.5-1.6% from the same period last year. Eleven banks reported year-on-year profit growth in Q3, while 15 others saw profits fall and one reported a loss.
The Orient Commercial Joint Stock Bank, listed on the Ho Chi Minh Stock Exchange (HoSE) as OCB, recorded the highest profit growth in Q3 with VND1.08 trillion ($43.9 million), a year-on-year increase of 49%.
The bank’s total operating income expanded 19% to VND2.47 trillion ($100.44 million), while its operating costs barely rose and risk provisioning costs declined from VND358 billion to VND312 billion ($12.7 million), thus boosting profit growth.
The lending segment posted a net interest income increase of 6.7% to VND1.87 trillion ($76 million) compared to the same period last year thanks to increased outstanding debt.
The net profit of foreign currency trading rose from VND45 billion in Q3/2022 to VND175 billion ($7.12 million) in Q3/2023, while securities trading changed from a loss of VND67 billion to a profit of VND220 billion ($8.95 million). Service activities saw falling profit partly due to reduced income from insurance business.
KienlongBank, registered on the Unlisted Public Companies Market (UPCoM) as KLB, reported profit growth of 43% year-on-year to VND189 billion ($7.68 million) in Q3. Its operating costs increased slightly but risk provision costs halved from VND182 billion in Q3/2022 to VND92 billion ($3.74 million).
Vietcombank (HoSE: VCB), one of the four largest state-owned banks known as the "Big 4", recorded falling profits in most business segments. However, a sharp decrease in operating and credit risk provision costs, from VND2.78 trillion to VND1.49 trillion ($60.79 million), helped its net profit grow by 20% year-on-year to VND7.27 trillion ($295.6 million).
Similar developments were also seen at Sacombank (HoSE: STB). The bank's credit risk provision costs fell from VND2.43 trillion in the same period last year to VND826 billion ($33.6 million), resulting in a net profit expansion of 35% to VND1.64 trillion ($66.7 million).
In contrast, MBBank (HoSE: MBB) posted a total income increase of 9% to over VND12.07 trillion ($488 million) thanks to increased net interest income and services revenue. Although risk provision costs rose 50% to VND1.46 trillion ($49.4 million), its net profit still climbed 18% to VND5.77 trillion ($234.6 million).
VIB, TPBank, Techcombank and BIDV also saw increased credit risk provision costs and reduced net profits. BIDV achieved a net profit from its business activities of VND11.84 trillion ($481.5 million), equal to the same period last year. However, provision costs expanded 10% to VND5.95 trillion ($227.3 million), pulling its net profit down 13% to VND4.58 trillion ($186.24 million).
Meanwhile, a series of small banks recorded a year-on-year profit decline of over 60%, such as Eximbank, Bac A Bank and Viet Capital Bank. Particularly, the National Citizen Bank (NCB), listed on the Hanoi Stock Exchange (HNX) as NVB, suffered a loss of VND244 billion ($9.92 million) in Q3 compared to a slight profit of several billion Vietnamese dong in the first two quarters.
In general, the income at most banks was flat or decreased in Q3. Profit growth in some banks depended on cost and risk provision reductions.
According to the State Bank of Vietnam, credit growth hit 7.1% in the year to October 27, far below the yearly target of 14-15%, even though lending interest rates decreased by an average over 2 percentage points compared to the end of 2022. Excess liquidity in the credit institution system leaves ample room for credit growth, but the economy’s demand and absorption remain low.