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Banks report huge profits amidst economic woes
While most businesses are struggling to survive in these hard times, many banks have posted whopping profits earned from lending in the first 3 quarters of the year.
For instance, VietinBank’s post-tax profit in the 3rd quarter topped VND1.39 trillion (US$67.8 million), sending the total profit of the first 9 months to VND4.12 trillion, or a 49 percent increase year on year.
Vietcombank posted a 9-month profit of VND3.3 trillion, with the 3rd quarter accounting for VND1.02 trillion, while the respective figures of Sacombank were VND1.59 trillion and VND456 billion.
Eximbank, Techcombank, and Asian Commercial Bank’s profits in the first 9 months rose by 39.3 percent, 42.4 percent and 15 percent compared to the same period last year to VND2.02 trillion, VND1.69 trillion and VND2.1 trillion, respectively.
Most banks also posted high growth of net interest incomes.
Vietcombank said its net interest income in the 3rd quarter more than doubled the same period last year to VND3.6 trillion.
Eximbank’s net interest income in the 3rd quarter topped VND1.44 trillion, up by 80 percent compared to the same period last year, while the figure of ACB rose by 42.4 percent year on year to VND1.65 trillion, and Sacombank, VND1.5 trillion.
Nguyen Phuoc Thanh, Vietcombank’s CEO, said interbank lending and deposits accounted for most banks’ net interest incomes.
Revenues from lending to the public sector only accounted for a mere proportion of the banks’ profits since credit growth this year was tightened, he said.
He said although the deposit interest rate cap was set at 14 percent a year since September, banks had earlier had to pay lenders at interest of up to 18 percent a year.
With this high rate, banks could not earn big profits even if the lending interest rate was 20 percent.
An executive of a bank said in September, the interbank market had been in an extremely tense state, enabling banks with big pockets to earn profits from interbank lending.
He said even prior to September, major banks had also managed to earn profits from their deposits at smaller banks with interest rates of up to 19 percent a year.
However, experts said the banking system still had potential instability.
Economic expert Dinh The Hien said many banks had posted rapid net interest income growth despite their low credit growth of below 10 percent.
Hien said these banks had earned profits from high lending rates which had burdened businesses.
Analysts said putting the burden of lending rates on businesses could be a double-edged sword to banks since this would increase the ratio of their bad debts.
In fact, most banks have seen bad debts rise in the 3rd quarter of this year, most of which were loans to the real estate sector.
tuoitrenews, reuters
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