Banks gain large profits from securities investment in 2023

Bắc Á Bank’s transaction office in Hà Nội. Profits from investment and trading securities accounted for 49 per cent of Bắc Á Bank’s non-interest income in 2023. — Photo vietnambiz.vn

HÀ NỘI — Profits from securities investment and trading activities of commercial banks increased sharply in the last quarter of 2023 as interest rates fell significantly.

At commercial banks, the investment portfolio is mostly Government bonds, with prices fluctuating inversely with interest rates. In 2023, interest rates decreased sharply from the beginning of the year, so Government bond prices increased sharply and brought in big profits to banks.

According to financial statements of banks, the total net profit from securities investment of 12 banks in Q4 2023 increased by 195 per cent to more than VNĐ5.6 trillion, while trading securities also brought in more than VNĐ300 billion. The two business segments contributed more than half to the growth of the banks’ total operating income.

Among the banks, ACB recorded a sudden increase in net profit from securities investment, bringing in more than VNĐ2.65 trillion against only VNĐ21 billion in the same period of 2022. Securities trading also contributed nearly VNĐ170 billion.

Both securities investment and trading activities contributed up to 36 per cent of ACB’s non-interest income. It was notable as the loss from the above two business segments of the bank in 2022 was equivalent to 7 per cent of non-interest income.

At Bắc Á Bank, profits from securities investment in the fourth quarter of 2023 increased three times against the same period of the previous year, helping the bank’s profits increase by 60 per cent in the fourth quarter. This business segment accounted for 49 per cent of Bắc A Bank’s non-interest income in 2023.

Profits from securities investment of Techcombank and TPBank doubled last year, bringing in VNĐ926 billion and VNĐ856 billion, respectively.

On average, the contribution of securities trading and investment of the 12 banks increased from 4 per cent of total non-interest income in 2022 to 15 per cent in 2023.

For some banks such as NCB and Bắc A Bank, securities trading activities have the largest contribution to their non-interest income.

However, experts forecast it will be difficult for banks to maintain the big profits from securities investment and trading in the coming quarters as there is not much room for the State Bank of Vietnam (SBV) to further reduce its policy interest rates in the context that the SBV wants to stabilise inflation and foreign exchange rate. — VNS