Non-interest income drives Vietnamese lender ACB’s Q2 profit growth

Vietnam’s Asia Commercial Bank (ACB) reported a pre-tax profit of VND6.1 trillion ($233.3 million) in the second quarter of this year, up nearly 9% year-over-year.

The Q2 growth driver mainly came from non-interest income, as net interest income - the bank’s traditional revenue source - saw a sharp decline, according to its freshly released consolidated Q2 financial statement.

Net interest income in Q2 reached VND6.68 trillion ($255.5 million), down 6% compared to the same period last year. The decline was primarily due to a significant increase in funding costs, while the net interest margin (NIM) came under pressure due to intensified competition in deposit interest rates.

This reflects the current banking landscape, where deposit rates have edged up to attract capital, especially from retail customers.

In this context, non-interest income emerged as a “bright spot” in ACB’s Q2 financial picture. Notably, income from other activities reached VND812 billion ($31 million), up 2.8 times year-over-year - making the largest contribution to the bank’s profit improvement.

Additionally, foreign exchange trading posted a positive result with a profit of VND670 billion ($25.63 million), a 57% increase over Q2/2024.

Notably, the recovering stock market since early 2025 helped investment securities trading generate a net profit of VND446 billion ($17 million), compared to a loss of VND14 billion in the same period last year. Proprietary securities trading also saw a profit of VND36 billion ($1.38 million), reversing a loss of VND41 billion a year ago.

Equity investments and capital contributions also surged, reaching VND58 billion ($2.22 million), nearly 11 times higher year-over-year, indicating the bank’s strategic efforts in seizing financial investment opportunities and recovering capital from strategic ventures.

In the first half of the year, ACB recorded a pre-tax profit of VND10.7 trillion ($409 million), up about 2% year-over-year, completing 46% of its full-year target of VND23 trillion set at the 2025 AGM in April.

Pressure on service and credit activities

However, not all segments performed positively. Net income from services, typically a stable revenue source from retail financial products and payments, declined sharply by 34% to only VND584 billion in Q2.

This may be due to intensified competition in card and payment services, as well as a slowdown in consumer activity during the quarter.

Although credit activities maintained stable growth, they were pressured by interest rate levels and asset quality concerns. By the end of Q2, ACB’s total outstanding credit reached about VND634 trillion, up 9.1% from the beginning of the year, higher than the industry average.

On the other hand, total deposits reached VND707 trillion ($27 billion), up 10.6% year-on-year. Of this, customer deposits were around VND567 trillion (up 5.6%), while valuable papers (such as bonds and deposit certificates) amounted to VND139 trillion, surging 37%. This indicates ACB’s effort to increase funding from medium- and long-term sources to ease short-term liquidity pressure, though at a higher cost.

As of June 30, ACB’s non-performing loan (NPL) ratio was 1.27%, slightly down from 1.49% at the end of 2024. Notably, the amount of loss-classified loans fell nearly 13% to VND5.9 trillion ($225.7 million), accounting for 74% of total NPLs, demonstrating effective credit quality management and resolution efforts.

However, the loan loss coverage ratio was only 76.3%, placing ACB in the mid-tier range among Vietnamese banks. In a still-volatile economy, with impacts especially on small- and medium-sized enterprises and the real estate market, improving provisioning and controlling bad debts remain top priorities moving forward.

Challenges in second half

Looking ahead to the second half of this year, ACB will continue to face systemic challenges, including interest rate competition and global economic uncertainties.

Regarding interest rate race, many banks are simultaneously raising deposit rates to attract medium- and long-term funds. This raises funding costs and puts further pressure on NIM (net interest margin).

Meanwhile, global economic uncertainties include the U.S. Federal Reserve’s (Fed) monetary policy moves, trade tensions, commodity price fluctuations - factors that affect exports, imports, and exchange rates. Stock and real estate market volatility also directly impacts banks’ investments and asset valuations.

Nevertheless, thanks to its solid retail foundation, digital ecosystem, and effective cost and risk management, ACB is still seen to have room for maintaining positive growth for the full year of 2025.

ACB is listed on the Ho Chi Minh Stock Exchange (HoSE) as ACB, which closed Friday at VND23,600 ($0.9) per share.