Vietnamese banks register more than robust profit growth

In the private banking sector, the current profit leader is Techcombank, which reported a 9 month PBT of VND7.77 trillion ($334.2 million), an increase of 61 percent over the same period last year. Nearly all business lines at Techcombank saw positive growth.

Pre-tax profit of lender ACB hit a record VND4.8 trillion ($206.3 million) in the 9-month period, 2.4 times higher than the same period last year.

The highest growth rate of the period went to Vietnam International Commercial Joint Stock Bank (VIB), with its profit before tax of VND1.72 trillion ($73.9 million), marking an increase of 176 percent over the same period last year.

Banks relied heavily on interest income to achieve these profits. For example, VPBank granted loans worth VND 211.09 trillion ($9.08 billion), up by 17 percent over the same period last year, and corresponding figures for Vietcombank were up 15 percent to VND 616.41 trillion ($26.5 billion).

In addition, the banks have also gained positive results from the fee-for-services approach.

According to banking experts, with strong credit growth at the beginning of the year and the economy forecast to remain stable, bank profitability is set to continue rising sharply towards the end of the year.

In the last months of the year, many banks’ credit facilities have been running low, but this is balanced by rising interest rates that boost their net income.

HSBC Vietnam CEO Pham Hong Hai said that profitability of the sector will peak in 2018 and gradually fall later. The central bank may not want to maintain such high credit growth in the near future, and could work to bring it down, he explained.

The country’s banking sector posted an estimated 18.17 percent loan growth in 2017, according to the Ministry of Finance. It has targeted growth of 17 percent this year.

Hai said that from 2019 onwards, bad debt may re-emerge as a problem for banks after the recent credit growth and the instability of the global financial markets. Therefore, banking profits will most likely see a downward trend next year.

State Bank of Vietnam Governor Le Minh Hung said recently that bad debts and potential bad debts amounted to 8.61 percent of total credit by the end of September.