Banks’ profits slide in Q3

By Minh Son   October 17, 2023 | 03:29 pm PT
Banks’ profits slide in Q3
An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy
Lenders BacABank and VPBank have reported a year-on-year decline in Q3 profits while others are forecast to be in the same trend amid rising bad debts and challenges in key operations.

BacABank saw its pre-tax profit plunging 70% year-on-year to VND77 billion ($3.14 million) in the last quarter, with all businesses, except for currency exchange, posting declines.

Profit from loans, which is a key business of the lender, fell by 30% to VND420 billion.

The bank managed to bring the cost of expenses down by 10% but this was not enough to offset the fall in profits.

Due to the ailing third quarter, BacABank saw its pre-tax profit in the first nine months drop 23% year-on-year to VND550 billion.

However, the bank was able to bring its assets up by 12% to VND145 trillion in the first nine months. Deposits rose 18% and outstanding loans grew 5%.

VPBank saw its profits fall for the fourth quarter in a row. From July to September its pre-tax profit dropped 30% year-on-year to over VND3.1 trillion.

The figure, however, was higher than the second and first quarters thanks to a recovery in FE Credit, a consumer finance unit in which it owns a 50% stake.

FE Credit recorded a provision for bad debt at VND2.2 trillion in the third quarter, down by nearly half from the second quarter.

VPBank, however, increased its provisioning by 50% in the same period to VND2.7 trillion.

The ratio of debts with high risks of default at the bank was nearly 4% by the end of the third quarter.

Analysts of SSI Securities had earlier forecast that some banks might see their profits declining by 4-32% year-on-year in the third quarter, among them VPBank, Techcombank and TPBank are expected to post the biggest plunges.

They forecast that Techcombank might see a profit fall of 12-15% year-on-year, and TPBank 25-32%.

Other banks that might see a decline are BIDV down 12%, and VIB down 4%. But some lenders, such as VietinBank, might buck the trend and post a growth of 20% thanks to less provisioning.

MBB, ACB and Vietcombank are also predicted to post double-digit growth.

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