Fifteen commercial banks had pre-tax profit of VND1 trillion or more in the first nine months of the year and some of them fulfilled the business plan for the year.

Only three banks have reported losses, namely LPB, Maritime Bank and SaigonBank. And only three banks reported a modest one-digit pre-tax profit growth rate. 

The other 18 banks have gained two- or three-digit growth rates. The 24 banks have  total pre-tax profit of VND66 trillion, up by 40 percent compared with the same period last year.

The sharp increase in pre-tax profit is explained by the increased NIM (net interest margin). 

The NIM of 24 banks was VND24 trillion higher than last year, up by 20 percent. The figures are extremely high at NAB (140 percent), OCB (47 percent), VIB (46 percent) and TP Bank and SBS (45 percent). However, five out of 24 banks reported minus growth rate.

The figures show the wider gap between the capital lending and mobilization interest rates compared with the last year. In other words, though the deposit interest rates increased in recent months, the lending interest rates increased even more sharply, thus helping improve banks’ profit in the first nine months.

The net profit from banking services only makes a modest contribution to the banks’ pre-tax profit (up by VND3.8 trillion). However, the figure still has caught analysts’ special attention because it represents the sharp increase of 29 percent over the same period last year.

The reason behind this was that the income from services increased more rapidly than the increase in costs for the operations, 27 percent and 25 percent, respectively.

As such, though lending remains the major source of income of banks, the contribution by banking services to revenue has been increasing significantly. The contribution is extremely high at VietinBank, MBBank, HDBank, TPBank, SBS and Maritime Bank, where services made up 30 percent or higher in their pre-tax profit.

While profit from lending and banking services increased, the provisions banks made against risks also increased, but more slowly. The 24 banks made VND47 trillion of provisions in the first nine months, an increase of 16 percent over the same period last year. This is also a reason behind banks’ sharp increase in profit.

Vietcombank reported an increase of VND3.7 trillion worth of pre-tax profit, which is explained by the bank’s success in speeding up lending with improved NIM.

Techcombank, with the pre-tax profit of VND2.9 trillion, not only witnessed the high NIM (28 percent, VND1.8 trillion), but also a sharp decrease in provisions (VND800 billion).

US$1=VND22,000

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