2022 marks new profit records for banks

The seven biggest lenders in terms of pre-tax profit were Vietcombank, Techcombank, BIDV, MB, VPBank, VietinBank and Agribank, each of them recording more than VND20 trillion in profits for the year.

Some banks posted a surge in profit growth, such as Eximbank (200%), BIDV (70%), LienVietPostBank (56%), SeABank (55%), VPBank (48%) and ACB (43%).

Vietcombank contributed VND7.4 trillion in corporate income tax, followed by Techcombank with VND5.1 trillion and BIDV with VND4.6 trillion.

Although the average credit growth of the sector was 14.5% last year (the highest in five years), some banks managed to record higher growth than average.

VPBank’s credit growth was 28.3%, followed by HDBank (25.6%) and MB (25.4%).

Some lenders, however, saw their profits decline due to their investments in stocks, bonds or currencies.

OCB saw its profit plunge 20% from 2021, mostly due to its investment in government bonds, while ABBank saw its profit drop more than 13% due to a plunge in profits from services, currencies and stocks.

But after two years of making provisions for Covid-19 to lower risk, banks were not under such pressure last year, and half of listed lenders lowered their bad debt provision compared to 2021.

BIDV, the state-owned lender which has been increasing its provision over the last five years, broke the chain in 2022 and saw profit surge 70% from 2021 to nearly VND23.06 trillion.

Top lender Vietcombank, however, still made a provision of 460% (writing off VND460 for every VND100 bad debt) to lower risks in the future.

Techcombank, the second most profitable lender, recorded a 10% growth in profit, lower than the sector average.

With large profits, banks gave their employees a bigger reward last year.

Although Vietcombank’s number of employees rose only 4% during the year, its salary and bonus fund increased by 14%. Vietcombank staff made VND36 million a month last year on average.

MB staff saw their average income rise 10.3% to VND39.6 million per month.

However, difficulties started to rise in the last quarter when many lenders, such as Techcombank, VPBank, MB, SHB, SeABank and ABBank, saw their profits drop year-on-year.

SSI Securities Corp. analysts said that the rising cost of capital along with weakening credit quality due to rising interest on loans signals difficulties for banks this year.

Some lenders saw a considerable increase in bad debt last quarter, they added.

Demand deposits, which is a large supply of “cheap” capital for banks, has been dropping, which threatens to narrow their net interest margin.

Income from credit will see a slower growth this year with credit growth forecast to hit 11%-12.5% this year, Rong Viet Securities said, adding that the dampened property market will also have an impact on the banking sector.