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Bank earnings down year-on-year in Q3
Commercial banks have begun announcing their third-quarter earnings, which are expected to be significantly lower industry-wide than the same period a year ago due to slow credit growth and rising bad debt levels.
Vietcombank has announced third-quarter profits of nearly VND1.1 trillion (US$51.4 million), an increase of 5.46 per cent over the same quarter a year ago. However, the bank's net profit for the first nine months of the year was VND3.2 trillion ($152.38 million), a decline of 2.14 per cent from the same period last year.
Techcombank, Eximbank, Sacombank and Lien Viet Post Bank also posted lower business results in the third quarter, citing slow credit growth, rising loan defaults and lower revenue from non-credit services.
Techcombank's net profit in the first nine months declined by 0.7 per cent year-on-year to about VND1.7 trillion ($80 million).
Sacombank was slightly below its targets for the period, with a pre-tax profit of VND2.1 trillion in the first nine months of the year, a figure equal to only 62 per cent of the bank's targets for the year. Eximbank was even further off-pace, with profits through September reaching only 52.5 per cent of the year's target.
Meanwhile, Lien Viet Post Bank's net profits plunged in the first three quarters, declining by 53 per cent from the same period last year. The bank blamed losses in revenues from securities and foreign exchange and other services.
Experts attributed the banks' negative performance to the ongoing effects of the economic downturn, which has caused sharp declines in revenue from lending, the main source of income for banks. To overcome the difficulties, banks were being urged to cut costs and seek opportunities for revenue from other services.
However, one banker who asked to remain anonymous said it was not easy to be profitable merely on non-credit services. When credit growth slowed, he said, service fees also fell accordingly.
Among banks to have already announced earnings, Vietinbank has been a rare bright spot, reporting an impressive VND4.5 trillion ($214.3 million) in net profit in the first nine months of this year, the highest in the banking industry so far and easily meeting the bank's target for the entire year.
In the third quarter alone, Vietinbank posted a net profit of VND2.4 trillion ($114.8 million), 10.4 per cent over the same quarter a year ago.
The strong profits came mostly from interest income. In the third quarter, the lender's net interest income was nearly VND4.6 trillion ($219.05 million), lifting the figure for the first nine months to VND13.4 trillion ($638.09 million).
DongA Bank was also on target for the year, posting a pre-tax profit of just over VND1 trillion ($47.6 million) in the first nine months, up VND42 billion over the same period last year and meeting 69 per cent of the bank's target for the year.
Most of the banks that have yet to report have predicted modest profits for the entire year, noting that credit growth has remained slow despite many banks offering attractive credit packages with low interest rates.
Asia Commercial Bank has not yet announced its results, but a report from Ban Viet Securities Co estimated the bank would see a loss of VND1.25 trillion ($59.5 million) in the third quarter, driven largely by losses in its gold-trading business. With an expected pre-tax profit of only VND1.2 trillion ($57.14 million) for the year through September, the bank was not expected to meet its target for the year of gross profits of VND5.5 trillion ($216.9 million)
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