Though the growth rate slowed down in the third quarter, banks still made high profits. However, the lending interest rates are expected to stay high.
SHB reported pre-tax profit of VND5.055 trillion in the first nine months of the year, an increase of 93.9 percent over the same period last year. The bank reached 86 percent of the yearly plan after three quarters.
With these achievements, following improvements many consecutive quarters, its ROA is 1.5 percent and ROE 25.6 percent, the best indexes among commercial banks.
SeABank pre-tax profit was VND2.53 trillion in Q3, 2.2 times higher than the same period last year and higher than the target set for the whole year 2021 (VND2.414 trillion).
ABBank was also among the most profitable banks with pre-tax profit of VND1.556 trillion, up by 68 percent.
Techcombank remains the most profitable joint stock bank. Its pre-tax profit in Q3 was VND5.562 trillion, up by 40 percent, and post-tax profit VND4.432 trillion. Meanwhile, the futures were VND17.098 trillion and 59.6 percent, respectively, for the first nine months of the year.
Prior to that, TPBank reported pre-tax profit of VND1.344 trillion, up by 36 percent for Q3, and VND4.4 trillion and 45 percent in the first nine months.
Smaller banks have also reported high profits. KienLongBank reported profit of VND72.8 billion in Q3 (+ 74.1 percent) and VND878 billion (six times) for the first nine months.
The figures were VND80 billion and VND164.4 billion, respectively, for National Citizen Bank.
HDBank reported that it has implemented 82 percent of the yearly business plan after nine months. SSI estimated that the bank got profit of VND1.7 trillion in Q3, up by 15 percent, and predicted profit of VND7.7 trillion for the year.
Meanwhile, MB, ACB and APB are expected to obtain two-digit growth rates. Though the growth rate slowed down in Q3, Vietcombank is predicted to be the most profitable bank this year with VND24.3 trillion, followed by Techcombank with VND22.3 trillion.
FiinGroup, after analyzing the financial reports of nine listed banks, found that the Q3 profit of the banks decreased by 13.4 percent compared with Q2, but still increased by 10.8 percent compared with Q3 2020.
|The Q3 profit of the banks decreased by 13.4 percent compared with Q2, but still increased by 10.8 percent compared with Q3 2020.|
The provisioning and interest rate cuts to support businesses during the pandemic have been cited as major reasons behind the profit decreases.
Further interest rate cuts not anticipated
According to State Bank of Vietnam, the credit of the banking system increased by 7.42 percent by October 7 over the beginning of the year, but did not rise compared with late August 2021.
The outstanding loans to the economy went flat in September, which increased credit in Q3 slightly, while the high provisioning against risks caused profits to decrease.
However, banks still made high profits in the first three quarters and credit remained the major source of income for them.
SBV has recently warned that the interest rates are low now, and one should not think of slashing deposit interest rates to ease lending interest rates in the current conditions.
With an average deposit interest rate of 5-5.5 percent per annum, the lending interest rate of 7.5-8 percent per annum can ensure benefits for both lenders and borrowers. This is the lending interest rate applied by many banks.
If banks continue to cut deposit interest rates, people will withdraw money from banks to invest in gold, securities and real estate. Meanwhile, banks need to keep the input capital costs stable to ensure capital supply. In other words, they need to maintain interest rates high enough to be able to attract deposits.
Businesses have complained that the lending interest rates are too high and called on banks to cut interest rates further to help them overcome difficulties caused by the pandemic.
The HCMC Delegation of NA Deputies has asked banks to share difficulties with businesses and people by easing interest rates and restructuring loans. It has proposed that the central bank clearly show interest rate cuts for commercial bank application.
Some business associations have proposed an interest rate cut to 5 percent.
A banking expert noted that since digital banking and electronic payment have developed recently, a large amount of cash in circulation has been transferred between bank accounts, which has helped credit institutions have more capital at low costs. This means that banks now have very low capital mobilization costs.
Meanwhile, the lending interest rates set by many banks are higher than the average level. Businesses said they have had to accept 6-month loans from some banks at 8 percent for the first three months and 10 percent for the next three months, or 9 percent on average.
Reports show differences in interest rate cuts by banks. State Bank of Vietnam reported that from July 15 to August 31, 16 banks cut the interest by VND8.8 trillion to support businesses. BIDV, for example, cut the interest of VND1.032 trillion, Vietcombank VND943 billion and VietinBank VND857 billion. Meanwhile, private joint stock banks cut only VND100 billion.
Therefore, experts believe that many banks, especially joint stock banks, can slash their lending interest rates further.
The banking sector will provide enough credit to businesses at supportive interest rates this quarter to help revive them, according to the State Bank of Vietnam’s Ho Chi Minh City branch.
It is reported that there is a significant gap among banks when it comes to interest rate reduction for people and businesses affected by the COVID-19 pandemic.