The major source of income for many realtors, Industrial Zone (IZ) developers, insurers and fertilizer manufacturers is interest from bank deposits, rather than from their core business fields.

The Long Hau Industrial Zone (IZ) developer did not have revenue from land leasing in the third quarter 2023. It is now relying on revenue from leasing workshops, accommodations, shopping centers and other activities.

Long Hau’s revenue plummeted by 62 percent in the latest business quarter and its pre-tax profit dropped by 59 percent to below VND42 billion.

The noteworthy thing is that a big part of the profit, VND24 billion, came from financial investments (bank deposit interest), an increase of 74 percent over the same period last year. The enterprise benefits from current high interest rates offered by banks with a deposit balance of VND1.1 trillion.

The IZ developer saw the revenue decrease by half to below VND250 billion in the first nine months of the year (there was no revenue from land leasing in the second and third quarters). Its pre-tax profit dropped by 38 percent to VND133 billion, of which VND57 billion was from deposit interest.

Ca Mau Fertilizer also underwent an unsatisfactory quarter with revenue down by 9 percent and profit by 87 percent to VND3.15 trillion and VND105 billion, respectively, a low for the last 11 quarters.

The fertilizer manufacturer would have taken a loss if it had not had revenue from financial investments, which increased sharply by 150 percent compared with the same period last year to VND200 billion. Of this, VND150 billion came from interest from bank deposits and the remaining from the exchange rate gap.

The enterprise admitted that smooth financial investments were a bright spot in its operation in recent months, in addition to the sales increase. However, the sharp fertilizer price fall and sales cost increase both seriously affected business results.

Ca Mau Fertilizer now has VND9.8 trillion deposited at banks, a major source of income. It reported pre-tax profit of VND714 billion in the first nine months, including VND400 billion from deposit interest.

CRV Real Estate is also living on bank deposit interest. The company reported that its profit from financial investments increased by 16 percent to VND92 billion.

This was an important source of revenue, which accounted for 85 percent of the company’s total profit of VND108 billion for the fiscal quarter (from July 1 to September 30, 2023). The company currently has a bank deposit balance of VND4.576 trillion, enjoying interest rates of 3.4-11 percent per annum.

The State Bank of Vietnam (SBV) reported that the total deposit balance by August had reached VND12.4 quadrillion.

Manh Ha