September 26, 2020 02:55

Advertisement Contact us RSS Vietnamese

Top banks by profits switch places on pandemic fallout

16:11 | 06/08/2020

There has been a major reshuffle in profit rankings at the top of the banking industry due to the effects of the pandemic and provisioning for bad debts.

top banks by profits switch places on pandemic fallout

The logo of Vietcombank on an ATM in Hanoi. Photo by Shutterstock/Asia Images.

While the top 10 list in terms of profits remained unchanged from last year, there were major changes in rankings.

In the public sector, VietinBank reported a sharp rise in profits but Vietcombank, Agribank and BIDV saw declines. Vietcombank, Vietnam’s biggest lender by market cap, remained the most profitable, a position it has held for the last few years.

But while it had achieved double the profit of the second most profitable bank last year, the 3% decrease in its first half profits to VND11 trillion (US$476.7 million) has helped close the gap.

BIDV reported a 5% drop in profits to VND4.45 trillion, while Agribank said profits plunged by over 35% to VND4.8 trillion. Both blamed falling revenues from lending, their main source of income, due to low credit growth and interest-reduction programs.

Agribank fell from third place last year to sixth in terms of profits, while BIDV fell from fifth to seventh. Nevertheless, the slump in their profits was less severe than an estimate made earlier in the year by SBV Deputy Governor Dao Minh Tu, who said interest rate cuts would cause state-owned banks’ profits to fall by at least 30%-40%.

VietinBank was the outlier in this group, with its pre-tax profits surging by nearly 40% to take it into second place in the top 10 list. But it was not due to better business performance, but a 10% decrease in provisioning for bad debts.

Similarly, private lender VPBank also saw virtually no change in revenues, but a 17 % decrease in provisioning resulted in a 40% surge in profits.

Techcombank saw profits rise 19% on a 30% surge in revenues, which took it down from second position to third.

The State Bank of Vietnam's latest report said COVID-19 is expected to affect the quality of VND2 quadrillion (US$85.2 billion) worth of debts issued by Vietnamese banks, or 23% of the total issuance.

This, along with rising bad debts across the banking sector this year, would put a strain on the performance of the sector and make it harder for weaker banks to recover, the central bank warned.

Source: vnexpress

english.vov.vn