Hanoi (VNA) – It was a surprise as a number of domestic commercial banks have reported big profits after years of poor performance, but this showed the country’s business environment has improved.

Nearly♊ 10 commercial banks have to date announced their business performance results⛄ in 2019 and most of them posted very impressive growth with high profits.

Racing to announce big profits

Unlike the previous year when the pre-tax profit of the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) reached only 6.8 trillion VND (291.4 million USD), its profit hit almost 11.5 trillion VND in 2019 (492.8 million USD), 26 percent higher than the bank’s target and up 83 percent from the figure in 2018. The bank’s non-performing loan (NPL) ratio was kept below 1.2 percent as compared to 1.59 percent at the end of 2018. VietinBank’s profit was a surprise as the bank has repeatedly asked for permission from authorities to increase capital and it has not had abundant capital for lending like other banks. Its credit growth was just 7.2 percent last year. Meanwhile, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) did not make any surprise because its pre-tax profit exceeded 18 trillion VND (771 million USD) in 2018, ranking first among local banks. It continued taking the lead last year. Vietcombank Chairman Nghiem Xuan Thanh revealed that the bank’s pre-tax profit reached 23.13 trillion VND (1 billion USD), making it one of the two listed businesses recording the highest profits on the market. Vietcombank officially hit the one-billion-USD benchmark in terms of profit, one year ahead of schedule set by its leaders in early 2019. This also marked the first time in the history of the Vietnamese banking industry as a domestic bank has reached the one-billion-USD benchmark in profit. Though the Vietnam Bank for Agriculture and Rural Development (Agribank) has yet to announce its official profit figures, it had previously reported a big profit, of nearly 12 trillion VND (514 million USD) in the first 11 months of 2019. The figure for the whole year is certainly higher. Similarly, the Vietnam Technological and Commercial Joint Stock Bank (Techcombank) has also made breakthroughs over the past three years. It set a target of earning 11.75 trillion VND (503 million USD) in pre-tax profit in 2019. Besides state-owned commercial banks, several private commercial banks also reported high profits. Most recently, the Tien Phong Commercial Joint Stock Bank (TPBank) announced its pre-tax profit of 3.86 trillion VND (165.6 million USD) last year, up 1.61 trillion VND, or 71.3 percent, from 2018 and 21 percent higher than the set target. This was the highest profit of TPBank to date. It was followed by the Orient Commercial Joint Stock Bank (OCB) which posted a pre-tax profit of over 3.2 trillion VND (137 million USD) last year, a 1.5-fold rise from 2018. This was a record growth rate since the bank was established. The Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) said its pre-tax profit reached 3.18 trillion VND (136.15 million USD) in 2019, 20 percent higher than the target set at the bank’s general meeting of shareholders.

Where are profits from?

Although Vietcombank revised down its lending interest rates three times in 2019, it still reaped a big profit. In 2018, a significant part of Vietcombank’s profit came from unusual incomes such as divestments but its profit in 2019 was mainly sourced from core business activities. The bank also increased retail credit from 46 percent in 2018 to 52 percent last year, while pouring more investment in bonds of credit organisations, reaching 53 trillion VND (2.27 billion USD). Meanwhile, other banks wiped out all NPLs at the Vietnam Asset Management Company (VAMC) ahead of schedule. For example, Agribank bought back all NPLs it had sold to the VAMC. Agribank’s recovered loans and settled NPLs hit almost 110 trillion VND (4.7 billion USD). On December 24, 2019, the Vietnam Prosperity Joint Stock Commercial Bank (VPBank) completed the repurchase of loans for special bonds at the VAMC, worth more than 3 trillion VND (128.4 million USD) in total. The Southeast Asian Joint Stock Commercial Bank (SeABank) became the 11th bank to accomplish the settle of special bonds worth 3.54 trillion VND (151.5 million USD) at the VAMC. Experts forecast that a number of credit institutions will focus on increasing capital and expanding lending activities in 2020, thus helping them to raise profits./.