The destination was very close
In the third quarter of 2020, VIB reached 1,668 billion dong of pre-tax profit, up 30% compared to quarter II / 2020 and 52% higher than the same period last year. In the first 9 months, total revenue of the Bank reached 7,854 billion dong, up 34%; Profit before tax reached VND 4,025 billion, an increase of 38% compared to the same period last year. Meanwhile, VIB’s pre-tax profit target for the whole year is 4,500 billion dong.
According to TS. Can Van Luc, a banking expert, banking industry profits will decline this year.
Ms. Nguyen Duc Thach Diem, General Director of Sacombank said that by the end of September 2020, the bank has completed 90% of the profit target of 2020. According to the plan to submit to the General Meeting of Shareholders for approval in 2020 , Sacombank sets a consolidated pre-tax profit target of 2,573 billion dong, down by 20% compared to the result in 2019. However, it is expected that the achieved pre-tax profit will exceed 20% of the set target, equal to the achieved of 2019 (3,200 billion VND).
According to Mr. Nguyen Canh Vinh, Eximbank’s Acting General Director, pre-tax profit from the core business of this bank by the end of September 2020 reached 1,200 billion VND, completing 84% of the year plan of 1,435 billion VND. Eximbank’s pre-tax profit after bad debt in the first 9 months of the year reached 1,100 billion dong, also completing 84% of the year target.
There are still many difficulties
Facing the impact of the Covid-19 epidemic, the lending activities of banks encountered difficulties when the capital demand of customers, especially enterprises decreased. Many banks have negative credit growth in the first half of this year (Eximbank is -9%, Saigonbank is -2.79% ). Income from the service is also affected because the bank has to reduce fees for customers. Meanwhile, bad debt tends to increase, requiring banks to increase provisioning for risks.
“In 2021, when the customer support is completed, the profit of the state-owned bank is estimated to increase 23%, while the group of commercial banks will increase by 11.2%”.
In the last months of 2020, credit demand will improve during the peak business season. The growth of outstanding loans of banks is tending to increase, especially in the context of decreasing deposit rates, banks have conditions to reduce lending rates.
However, the pressure to increase provisioning for credit risks is weighing on the profitability of banks. Especially, when bad debt has not been “concealed” by Circular 01/2020 tends to increase, banks are forced to increase their risk provisions.
SSI Securities Analysis Center (SSI Research) estimated that ACB’s Q3 / 2020 pre-tax profit increased 23%, reaching 2,370 billion VND in the first 2 quarters of the year, ACB reported a profit of 3,819 billion VND before tax, while the spending for the whole year is 7,636 billion VND); VietinBank reached 3,240 billion dong, up 3.8% over the same period; BIDV reached VND 2,400 billion, an increase of 3.5% over the same period.
According to TS. Can Van Luc, a banking expert, banking industry profits will decline this year. The need to increase the provisioning, apply measures to delay, postpone debt, exempt or reduce interest rates will affect the profitability of banks. It is estimated that Vietnam’s bank profits will decrease by 20-25% in 2020.
SSI Research once said that state-owned banks were under more pressure from the State Bank to support customers during the pandemic. Meanwhile, private banks still have certain room to balance customer support and ensure reasonable profits.
Banks’ pre-tax profit in 2020 may decrease, but according to economic and financial analysts, by 2021, when customer support is completed, the profit of state-owned banks is estimated to increase. 23%, while the group of joint stock commercial banks increased 11.2%.
Source: ndh.vn – Translated by fintel.vn
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