The year 2023 is considered to be a difficult year for the banking industry. The profit growth of the whole system was forecast to grow at about 10% at the beginning of the year, however, the figure has been adjusted to just over 5%.
VPBank’s credit growth higher than industry average
So far, there have been 6 banks revealing their business results for the third quarter and the first 9 months of the year (including: VPBank, PG Bank, Bac A Bank, Saigonbank, Bao Viet Bank and LPBank). Four of them recorded a double-digit profit decrease in the third quarter while the other two banks had growth but at a low level.
VPBank's third quarter consolidated financial report showed that pre-tax profit in the third quarter reached more than VND 3,117 billion, down more than 30% compared to the same period last year. Accumulated pre-tax profit of VPBank in the first 9 months of the year is VND 8,279 billion, down 58% compared to the same period last year, only achieving about 35% of the plan set at the beginning of the year (VND 24,003 billion).
However, VPBank's operations also have bright spots with high credit growth. At the parent bank, credit growth increased by more than 22% compared to the beginning of the year, reaching more than VND 488,000 billion, many times higher than the industry average growth rate of 6.9% (as of the end of September). Thanks to that, the bank's net interest income, despite decreasing by 15% over the same period, is still the highest level in the last three quarters.
Along with that, current account savings account (CASA) - the bank's low-cost capital source, recorded growth of more than 22% compared to the beginning of the year, contributing to raising the CASA ratio to 17%.
The bank also said that consumer finance company FE Credit, considered an extended arm of VPBank, has gone through the initial stage of restructuring and has gradually regained its growth trajectory as it began to record gradually decreasing losses and positive profit growth in the third quarter.
Previously, Bac A Bank also announced that its third quarter’s pre-tax profit decreased sharply by 73% compared to the same period last year, to just over VND 77 billion. In the first 9 months of the year, the bank's pre-tax profit decreased by 22.9% to nearly VND 560 billion despite cutting risk provision costs by 33%.
The positive point in this period's financial statements of Bac A Bank is that the growth rate of total assets and capital mobilization remains at double digits, up 12.6% and 18.2% respectively compared to the beginning of the year. Meanwhile, asset quality is still maintained with the bad debt ratio controlled at 0.77%.
PG Bank, a bank still in the process of restructuring after major shareholder Petrolimex divested capital, also announced not very positive business results with pre-tax profit in the third quarter decreasing by more than 60% compared to the same period, only reaching more than VND 56 billion.
The bank's profit growth momentum has slowed down since the second quarter and showed a reversal in the third quarter. In the first 9 months of the year, PG Bank's profit before tax was VND 360 billion and its profit after tax was VND 288 billion, both down 7% compared to the same period last year.
On the contrary, Saigonbank - the bank with the lowest asset scale in the system, was the first bank to record profit growth but mainly thanks to cutting risk provision costs during the period.
Specifically, pre-tax profit in the third quarter reached VND 64.7 billion, up 7.5% over the same period last year. In the first 9 months of the year, Saigonbank's pre-tax profit was VND 248 billion, up 5.1% over the same period last year, achieving nearly 83% of the year's profit target.
LPBank’s pre-tax profit in the third quarter reached VND 1,241 billion, a slight increase compared to the same period last year, an increase of 41% compared to the previous quarter. In the first three quarters of the year, the bank's pre-tax profit reached VND 3,678 billion, down 24% over the same period last year, reaching 61.45% of the whole year plan.
Bao Viet Bank has also just released its financial report with pre-tax profit for the third quarter reaching VND 9.1 billion, down 5.7% over the same period last year. The bank’s 9-month profit before tax is VND 33.8 billion, down 6.7%.
In the first 9 months of 2023, the bank's customer loans and deposit mobilization both increased by double digits, up 16.4% and 18.6%, respectively, compared to the beginning of the year. Credit growth has a large contribution from strategic segments such as individual customers and small and medium enterprise customers.
Bank profits will decelerate and diverge sharply
In the 2023 industry analysis report, many securities companies have predicted that pre-tax profits of the entire banking industry will decelerate in 2023 and continue to diverge strongly in the following year.
Bao Viet Securities (BVSC) analysts expect bank profit growth (stock group analyzed by BVSC) to reach 8% in the third quarter compared to the same period last year, reaching 5.5% in the last two quarters of the year and 5.2% for the year 2023. In 2024, the profits of this industry group can flourish, estimated to reach 18.9% when the economy begins to recover.
Previously, many securities companies have forecast that banking industry profits in 2023 will increase by about 10% - 15% compared to 2022, a significant decrease compared to the average growth rate of nearly 35% in the previous year.
Vietcombank Securities (VCBS) forecasts that the industry's pre-tax profit in 2023 will grow by about 10%. There will be a divergence in profit prospects between banking groups and this divergence will continue to become stronger in 2024.
Most recently, SSI Securities (SSI Research) estimated that the profit growth forecast of listed banks is expected to have strong differentiation.
Some such as Sacombank, VietinBank, Vietcombank, MB or ACB can record profit growth rates of double digits. Meanwhile, some banks such as VIB, Techcombank, BIDV, MSB, TPBank may see profits decrease over the same period.
The decline in bank profits is explained by reasons such as low credit growth, narrowing net interest margin (NIM), and provisioning pressure.
KB Securities (KBSV) believes that in the short term, the banking industry will still face difficulties from headwinds in the corporate bond market and cross-selling insurance activities (bancassurance). Therefore, revenue from investment banking and insurance needs more time to recover. However, bright spots in industry development can still be seen in the second half of 2023.
Analysts predict that net interest margin (NIM) of the banking industry will bottom in the third quarter and begin recovering in the fourth quarter.
Source: vietnambiz
Compiled by VietnamCredit
