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|Vietcombank lead the charts in profit in the first quarter|
Many banks have just unveiled their first-quarter financial report with soaring profits during the period, even compared to pre-pandemic times.
Along with this, leading state lender Vietcombank took the lead, reaping more than VND8.6 trillion ($373.9 million) in pre-tax profit during the period, a 65 per cent jump on-year and 47 per cent higher than the first quarter of 2019, before COVID-19 emerged.
Other major state lender VietinBank ranked second, posting VND8.06 trillion ($350.43 million) in pre-tax profit, up 171 per cent on-year and 160 per cent compared to the similar period in 2019.
|Aside with rising interest income and services-related earnings, a sharp decline in provisioning sum helped assure banks’ stellar profit growth.|
In the private bank segment, a raft of banks registered a record in their profit which doubled over a year ago.
Accordingly, Techcombank counted VND5.5 trillion ($239.13 million) in its pre-tax profit during the period. The figure for Military Bank (MB) was VND4.6 trillion ($200 million), for VPBank more than VND4 trillion ($173.9 million), and for Vietnam International Bank (VIB) VND1.8 trillion ($78.26 million).
Smaller banks also reported very upbeat profit with 40-70 per cent higher compared to a year ago.
In the first quarter, 19 out of 27 banks which represent about 60 per cent of the banking sector’s total capital value have announced their first-quarter business results with a 86.7 per cent jump on-year in post-tax profit on average, despite lower growth of only 30.2 per cent in their total operating income (TOI) during the period.
According to statistics by fintech firm Fiin Group, banks have fulfilled 31 per cent of their full-year after-tax profit targets. The lenders were reported to set a 24 per cent jump in their after-tax profit targets in 2021 generally.
Analysts at Fiin Group viewed the bank target as achievable because the State Bank of Vietnam’s Circular No.03/2021/TT-NHNN on debt rescheduling has allowed banks to make loan loss provisioning to support firms affected by COVID-19 for three years.
The main reason behind banks’ soaring profit in this year’s first quarter, however, came from a sharp jump in interest income as well as earnings from services.
Accordingly, at VietinBank, in the first quarter of this year, the bank posted 26.4 per cent jump in its profit from lending activities, leveraging the fact that it paid VND2.6 trillion ($113 million) less in interest income to the depositors compared to the corresponding period in 2020.
Similarly, Vietcombank saw a reduction of nearly 21 per cent on-year in interest income it paid to depositors. The figure at Techcombank was 27 per cent.
At Vietnam Maritime Commercial Joint Stock Bank (MSB), despite a modest growth of 7 per cent in revenue from credit activities, the bank’s net profit soared 59 per cent during the period on account of lower capital costs which shed 24 per cent.
Aside from rising interest income and services-related earnings, a sharp decline in provisioning sums helped assure banks’ stellar profit growth. Across the banking sector, such sum just rose from 5-10 per cent in the first quarter this year compared to the 40-60 per cent jump in the previous year, several banks even saw a reduction in provisioning volume.
At VietinBank, its provisioning volume in this year’s first quarter shed 69 per cent on-year (more than VND3 trillion or $130.43 million), the key factor behind its record profit during the period.