Banks’ profits surge in Q1

VPBank surpassed state-owned Vietcombank to become the most profitable lender with a near tripling of its profits to VND11.15 trillion (US$485.6 million), which included revenues from its exclusive bancassurance contract with AIA.

SHB doubled its profits to VND3.23 trillion, thanks to a 90-percent growth in net interest income.

Only VietinBank and OCB reported declines in profits.

VietinBank attributed the fall in profits to the VND4.4 trillion provisioning it made for loans, up 230 percent year-on-year.But its credit growth in the first three months was 9 percent, much higher than the industry average of 5 percent and sharply up from last year’s 2.2 percent.

Revenues from services were also a major driver of profits. Most private lenders posted high net profits from services, but state-owned Vietcombank, BIDV and VietinBank saw a decline after offering free online transactions.

For a second year the State Bank of Vietnam requires banks to classify and make provisions for assets acquired from the following: debt trading, trading of government bonds on the stock market, forward trading of valuable papers between banks, purchase of promissory notes, treasury bills, and certificates of deposit and bonds sold by other credit institutions.

Increasing debt provisions was a widespread trend following a sharp rise in nonperforming loans since the beginning of this year.

SSI Securities said asset quality has worsened at many banks, but is not concerned though debt provisioning puts pressure on banks.

Vietcombank Securities, a subsidiary of Vietnam’s biggest lender, forecast high growth for private players with low cost of capital.

It said BIDV, MB, Techcombank, ACB, TPBank, and MSB could achieve profit growth of over 20 percent this year.