Banks increase profits on strong credit growth

Banks at the end of July reported significant increases in first-half profits on strong credit growth despite pressures from the pandemic

A number of banks have reported huge profits in the first half of the year, and lower lending rates to support enterprises struggling in the pandemic. — Photo tinnhanhchungkhoan.vn

A number of banks at the end of July reported significant increases in H1 profits on strong credit growth despite pressures from the coronavirus pandemic.

Vietcombank earned more than VNĐ14.5 trillion profit in the first six months, a year-on-year rise of 38 per cent, making up for 58 per cent of the bank’s target. However, it said that the profits in the remaining months would largely depend on rate cuts in an effort to support virus-hit customers.

Thirteen other banks, which already announced financial reports for the second quarter, earned a total profit of more than VNĐ30 trillion in the first half.

These included Techcombank, MB, TPBank, OCB, SeABank, ABBank, Kienlongbank, Viet Capital Bank, Vietbank, PGBank, Saigonbank and NCB, but not the 'big four' banks (Vietcombank, BIDV, Agribank and Vietinbank) which account for more than 50 per cent of total credit in the economy.

Some saw huge increases in profits such as VietCapital Bank with a 440 per cent increase to VNĐ337 trillion, Kienlongbank by 400 per cent to VNĐ805 billion, NBC by 400 per cent to VNĐ125 billion and SeAbank by 130 per cent to VNĐ1.55 trillion.

Kienlongbank said that the profits mainly came from interests and services fees.

Deputy Governor of the State Bank of Việt Nam Đào Minh Tú said that the profit figures were not final, adding that bank profits would not be fully clear until the end of the year.

Nguyễn Quốc Hùng, general secretary of the Việt Nam Banking Association, said bank profits must be understood properly, objectively and comprehensively.

He pointed out that credit institutions had improved their governance and financial capacity through increasing their charter capital, ensuring capital adequacy ratio in accordance with Basel II banking rules.

Credit institutions also invested in information and technology and enhancing reforms to reduce costs, coupled with the development of digital banking and e-payments, which helped increase demand deposits.

Nguyễn Xuân Thành, manager of the Fulbright Economics Teaching Program, said that good banking operation in the pandemic should be viewed positively. It was the first time macro-stability and the health of the banking and financial sector were maintained in the crisis, he said, adding that credit institutions also made significant contributions to the State budget.

Thành, however, called for a close watch of credit growth and inflation to prevent whopping rises which might threaten the banking system’s safety. Banks should focus on renovating governance and ensuring international standards about risk management, he added.

Financial and banking expert Nguyễn Trí Hiếu said that the strong increases in bank profits were mainly attributed to good credit growth, which was at 5.47 per cent in the first half of this year, and low risk prevention costs as the central bank maintained debt classifications to support virus-hit customers.

According to economics expert Cấn Văn Lực, if the interest rate were reduced by one percentage point by the end of this year, bank profits could decrease by around VNĐ45 trillion in the second half.

Several banks recently reduced rates to support virus-hit customers.

Maritime Bank cut lending rate by up to three percentage points per year. VIB cut rate by an average of 1.5 percentage points for more half its 8,500 customers, while TPBank lowered rates by 0.5-1.2 percentage points for enterprises.

HDBank, MB, ACB, Sacombank, Vietcapital Bank, Vietcombank, BIDV and Vietinbank also cut lending rates by around one percentage point.

Reducing lending rates coupled with extended credit room were expected to promote credit growth in the remaining months of this year, with credit anticipated to slow as enterprises were hit by the pandemic.

A recent survey by the State Bank of Việt Nam showed that credit institutions forecast credit growth to expand at 4.7 per cent in the third quarter, and 13.1 per cent for the full year, lower than the rate of 14.7 per cent in a previous survey, over worries about the unpredictable impact of the pandemic.

BIDV Securities Company said that lowering lending rates would affect bank profits but extending credit room could make up for the reductions.

According to Lực, credit growth between 10 per cent and 15 per cent this year was appropriate.

The State Bank of Việt Nam recently approved credit room extensions for several banks, signalling that priority would be given to credit institutions that reduced lending rates to support businesses and people to overcome the impact of the pandemic. — VNS

Source: VNA
vietnamnews.vn

Related News

Banks with the problem of promoting credit growth

Banks with the problem of promoting credit growth

VCN - It is estimated that by the end of June 2024, the economy's credit growth will reach nearly 4.5%. This number is still far from the yearly credit growth target of 14-15%.
The "compass" for policy credit

The "compass" for policy credit

VCN - Directive No. 40-CT/TW issued on November 22, 2014, by the Central Committee of the 11th Party Congress, focusing on enhancing the Party's leadership over social policy credit, is recognized as a sound policy by both the Party and the State, becoming a "compass" for policy credit activities.
Interest rate fluctuations in the world affect Vietnam

Interest rate fluctuations in the world affect Vietnam's exports

VCN - According to experts, the recent interest rate cuts by the European Central Bank (ECB) and the Bank of Canada (BoC) are important moves that signal a broader trend of monetary easing among major central banks. This is likely to affect Vietnam's exports.
Banks actively sell secured assets but still find it difficult to "close orders"

Banks actively sell secured assets but still find it difficult to "close orders"

VCN - A problem that has been reflected in the past few years is the "sluggish" banks' ability to sell mortgaged assets to handle bad debts, whether real estate, machinery, cars, or even gold.

Latest News

2025 budget estimation must be practical, accurate and efficient

2025 budget estimation must be practical, accurate and efficient

VCN - Directing the 2025 state budget estimation, Minister of Finance Ho Duc Phoc emphasized that units must ensure that the 2025 budget estimation must be practical, accurate, efficient, and meet the requirements for performing professional and political tasks assigned to central and local agencies.
The corporate bond market will be more vibrant in the second half of the year

The corporate bond market will be more vibrant in the second half of the year

VCN - In the first half of 2024, with bond maturity pressure continuing to increase, corporate bond issuance has shown many positive signs compared to the previous year. According to forecasts, businesses' need to borrow and issue corporate bonds will accelerate in the second half of 2024.
Prioritize resources and promptly supplement capital for policy credit

Prioritize resources and promptly supplement capital for policy credit

VCN- In the near future, to further promote the effectiveness of policy credit, the Ministry of Finance will continue to preside over and coordinate with relevant ministries, branches and the Vietnam Bank for Social Policies (VBSP) to implement many key solutions.
Measures suggested to boost startups’ access to capital

Measures suggested to boost startups’ access to capital

The recent vigorous growth of startups in Vietnam has attracted domestic and foreign investors, but insiders recommended more efforts be made to facilitate startups’ access to funding from investors so that they can live up to potential.

More News

Inflationary pressure seen from monetary policy

Inflationary pressure seen from monetary policy

VCN - The economy went through the first half of the year, inflation is still under control and forecast to reach the target set by the National Assembly and the Government. However, variables from the currency market such as exchange rates, interest rates, credit..., even gold prices, are issues that need to be paid attention.
Proposal to increase Special Consumption Tax on tobacco products

Proposal to increase Special Consumption Tax on tobacco products

VCN - At the workshop Special Consumption Tax on cigarettes held by Vietnam Tax Consulting Association and the Institute of Financial Strategy and Policy on July 16, experts and businesses clarified the goals and content of amended the special consumption tax policy on tobacco products. According to experts, there cannot be a solution that fully ensures the benefits of both consumers, the state and businesses, but it is necessary to choose the most optimal option to achieve the initially set goals.
Savings of individual customers at banks hit record high

Savings of individual customers at banks hit record high

In spite of low interest rates, figures from the State Bank of Vietnam (SBV) released this week show deposits of individual customers increased by more than VNĐ39.7 trillion in April, to reach more than VNĐ6.7 quadrillion.
Managing fiscal policy has achieved many positive and comprehensive results

Managing fiscal policy has achieved many positive and comprehensive results

VCN - On July 15, the Ministry of Finance held an online conference to summarize state budget financial work in the first 6 months of the year, implementing tasks in the last 6 months of 2024. Minister of Finance Ho Duc Phoc attended and directed the conference. Also attending the Conference were Deputy Ministers of Finance, leaders of units under the Ministry of Finance.
Determine tools, policy for inflation control

Determine tools, policy for inflation control

VCN - According to economic expert Associate Professor, PhD. Ngo Tri Long (photo), former Director of the Price Market Research Institute (Ministry of Finance), inflation is an issue that needs special attention, especially related to the management of monetary policy, interest rates, increasing prices of goods and services...
The impact of wage increases on inflation will not be too significant

The impact of wage increases on inflation will not be too significant

VCN - Addressing concerns related to wage and price increases, Dr. Nguyen Duc Do, Vice Director of the Institute of Economics - Finance (Finance Academy), believes there are not many factors causing sudden price surges in the last 6 months of 2024. Therefore, it can be expected that the rate of price increases in the last 6 months will be comparable to that in the first 6 months of 2024.
Imposing and raising special consumption tax contributing to change consumption behavior

Imposing and raising special consumption tax contributing to change consumption behavior

VCN - At the Workshop on Comments on Completing the Revised Law on Special Consumption Tax (SCT) organized by the Vietnam Confederation of Commerce and Industry (VCCI) on July 11, many experts and businesses contributed their opinions to clarify the importance and impact of the revised special consumption tax law, which emphasizes the addition of taxable areas or tax increases to change society's consumption behavior.
The local Finance sector is flexible and strict in managing budget revenues and expenditures

The local Finance sector is flexible and strict in managing budget revenues and expenditures

VCN - Although the forecast for the last 6 months of the year will still have many difficulties and challenges, the Finance sector in all localities expressed their determination to strive to achieve and exceed estimates, while strengthening the prevention of revenue loss and handling tax debt recovery, etc.
Finance industry excellently accomplishes financial and budget tasks in the first half of 2024: Minister Ho Duc Phoc

Finance industry excellently accomplishes financial and budget tasks in the first half of 2024: Minister Ho Duc Phoc

VCN - The Finance industry excellently accomplishes financial and budget tasks in the first half of 2024, said by Minister of Finance Ho Duc Phoc at the Online conference to review performance of financial and budget tasks in the first half of 2024 and set out tasks for the second half of the year.
Read More

Your care

Latest Most read
2025 budget estimation must be practical, accurate and efficient

2025 budget estimation must be practical, accurate and efficient

VCN - Directing the 2025 state budget estimation, Minister of Finance Ho Duc Phoc emphasized that units must ensure that the 2025 budget estimation must be practical, accurate, efficient, and meet the requirements for performing professional and political
The corporate bond market will be more vibrant in the second half of the year

The corporate bond market will be more vibrant in the second half of the year

VCN - In the first half of 2024, with bond maturity pressure continuing to increase, corporate bond issuance has shown many positive signs compared to the previous year. According to forecasts, businesses' need to borrow and issue corporate bonds will acc
Prioritize resources and promptly supplement capital for policy credit

Prioritize resources and promptly supplement capital for policy credit

VCN - According to the VBSP, by the end of June, total policy credit capital rose 7.6% year-on-year to VND 372,723 billion, including entrusted capital from the local budget at VND46,929 billion, an increase of VND7,755 billion, accounting for 12.6%.
Measures suggested to boost startups’ access to capital

Measures suggested to boost startups’ access to capital

The recent vigorous growth of startups in Vietnam has attracted domestic and foreign investors, but insiders recommended more efforts be made to facilitate startups’ access to funding from investors so that they can live up to potential.
Inflationary pressure seen from monetary policy

Inflationary pressure seen from monetary policy

The economy went through the first half of the year, inflation is still under control and forecast to reach the target set by the National Assembly and the Government
Mobile Version