Banking-finance

Commercial banks report record high profit in 2017

SGGP
Commercial banks announced their performance results last year in the last two weeks of January 2018, reporting huge pre-tax profit far exceeding the year plan.

Transaction at a bank in HCMC (Photo: SGGP)

Transaction at a bank in HCMC (Photo: SGGP)

Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) posted the pre-tax profit of VND11 trillion, up nearly 33 percent over 2016. It was followed by Joint Stock Commercial Bank for Industry and Trade of Vietnam (Vietinbank) with VND9.2 trillion, the highest level in the history of 30 years of the bank’s operation.
Similarly Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) reported the record high pre-tax profit of VND8.8 trillion. Vietnam Prosperity Joint Stock Commercial Bank (VPBank) recorded before and after tax profit of VND8,126 billion and VND6,438 billion respectively.
Small banks also reported high pre-tax profit, for instance Kien Long Bank saw an increase of 71 percent over 2016 to VND259.5 billion, ABBank posted the growth of 115 percent to get VND619 billion.
VietBank said that it had cleared the loss from previous year and achieved VND263 billion in profit. Under restructuring Sacombank also enjoyed strong profit increase.
According to experts, the economy has recovered, credit operations of banks have been improved and bad debt has gradually been handled. These all have positively impacted banks’ profit.
Last year Gross Domestic Product (GDP) grew 6.81 percent and credit growth hit 18.78 percent.
Financial reports of banks show their credit growth rate hit the ceiling level of 19-20 percent so revenue from credit activities continued accounting for a large ratio in the total revenue of banks. In addition, retail, non-credit products and services have significantly contributed to banks’ revenue.
Difficulties after implementing the banking restructuring project in the phase of 2011-2015 have been overcome, creating momentum for banks to develop.
In previous years, bank profit was eroded because high bad debts forced them to extract profit for risk provision fund establishment.
Pre-tax profit of Eximbank topped VND1 trillion after many years majorly because of a strong reduction in risk provision cost. It was only VND604 billion last year, much lower than VND1,089 billion in 2016.
Explaining the big change, the bank’s leaders said that bad debt handling had been stepped up and the bank no longer spent a large amount on risk provision fund.
Mr. Nguyen Dinh Tung, director general of Orient Commercial Joint Stock Bank (OCB), said that one of reasons for the bank’s strong profit increase topping VND1 trillion was that loan quality and deep debt had been limited and risk provision cost had been lowered.

By HANH NHUNG – Translated by Hai Mien

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