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Although credit growth slowdown, banks are still big profit?

Monday - 16/07/2018 21:03
Although credit growth slowdown, but it will not affect the profitability of banks. This is in line with previous assumptions and banks are benefiting from higher NIMs as interest rates increase generally.
Profits grow strongly
Until now, banks have not released its financial statements for the second quarter of 2018. However, according to the preliminary figures that some banks have announced, it is likely the Year of 2018 will continue to be a "make money" of the banks.

With the advantage of capital as well as assets, Vietcombank is temporarily leading the profit in the whole system in the first 6 months of 2007 reached VND 7,722 billion pre-tax profit, up 52.7% against the same period in 2017 and equal to 55.2% of the bank's plan in 2018.

Meanwhile, a mid-sized bank, VIB, also reported a pretax profit of VND1,151 billion in the first half of 2018, more than three times the same period in 2017. The most important contribution to VIB's earnings growth was its retail sales, with sales up 100% against the same period.

Tien Phong Commercial Joint Stock Bank (TienPhongBank) said that in the first six months, pretax profit, after fully provisioning, reached VND 1,024 billion, an increase of VND 521 billion, equivalent to doubling against the same period in last year, and reached 112% compared with the first half of 2018. In particular, in the second quarter, the bank achieved pre-tax profit of VND 512 billion.

TPBank said that this result, in addition to the increase in credit income, contributed to a positive increase in income from services, reaching VND 224 billion, double than the same period in 2017. Income from Its Insurance activity also has a very positive growth, contributing significantly to the bank's income.

This is a good business season for the banking industry this year.

Credit growth reductions but many other factors support

SBV Governor Nguyen Thi Hong said that credit growth in the first 6 months was 7.88% while that of the same period last year was 9.06%.

A slight deceleration in credit growth against the same period last year reflects the more cautious view of the SBV on M2 money supply and new lending due to accelerated inflation.

However, according to experts at Ho Chi Minh City Securities Company (HSC), although credit growth decelerates but will not significantly affect the profitability of banks. This is in line with previous assumptions and banks are benefiting from higher NIMs as interest rates generally increase.

In addition, good non-interest income streams benefited from FX gains in the context of exchange rate fluctuations, rising service fees and the stock market rally in the first quarter, as well as the sale of part of the bond portfolio of Government to realize profits.

In addition, banks also contributed to the increase in liquidation of off-balance sheet assets that had been appropriately provisioned and written off; Recognizing irregular earnings from transfer of shares at other banks as in the case of Vietcombank; or contributions from insurance agency business as in the case of VPBank, Techcombank; Expansion of consumer finance with the entry of new names such as MBB and provision expenses decreased as many banks completed the provision of VAMC bonds and bad debt backlog.

However, HSC also said that low CAR and high risk ratio could affect the profit outlook in certain cases.

For banks with low CAR such as BIDV and Vietinbank, be careful about loan expansion. Meanwhile, banks with a high proportion of real estate loans such as Techcombank will have to reduce the pace of expansion of this segment as the proportion of real estate loans of Techcombank has increased since the beginning of this year. .

Another obstacle for banks is the requirement to reduce short-term medium to long-term deposits to 40% by the end of this year.

However, despite these difficulties, banks are still operating very well, reflected in the quality of assets and credit risk management has improved significantly. As a result, the provision cost decreased and the NPL ratio was stable and low.

In addition, the bank's profit structure was more flexible thanks to higher non-interest income streams and higher bank service charges, while contributions from new income streams such as insurance commissions and financials. use (in medium-sized banks) is also expanded.

Accordingly, HSC forecasts 1-H net profit will increase by 8% -150% y / y and thus fulfilling more than 50% of the full year target.

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