Profits plummeted, bad debts exceeded 4%.

Profits "evaporated" by 67% compared to the same period last year.

Vietbank (UPCoM: VBB), a commercial bank in Vietnam, has just released its financial report for the third quarter of 2023. According to the report, the bank recorded net interest income of VND 348.7 billion, a decrease of 13% compared to the same period last year.

Vietbank stated that the decrease in net interest income was mainly due to the volatile global economic situation, which affected the domestic economy and financial markets, especially the bond, stock, and real estate markets. This significantly impacted the business operations of Vietbank's clients, resulting in a lower-than-planned capital utilization rate.

Profits from foreign exchange trading also decreased by 44%, reaching only 25 billion VND due to unfavorable exchange rate movements in the market, hindering profit-taking. Net profit from other banking activities evaporated by 99%, plummeting from nearly 75 billion VND in the same period last year to just 0.66 billion VND.

Notably, while the two aforementioned segments declined, Vietbank's investment securities profit showed a significant improvement, increasing sharply by 208% compared to the 3.4 billion VND profit in the same period last year, bringing the bank 10.5 billion VND thanks to effectively taking advantage of opportunities offered by the bond market. Service activities also increased slightly by 3%, reaching nearly 32.5 billion VND.

After deducting operating expenses, Vietbank earned a net profit from business operations of VND 66 billion, a decrease of 63% compared to the same period last year.

During the period, Vietbank reduced its credit risk provision costs by half, from VND 40.5 billion in Q3/2022 to VND 20.3 billion.

However, due to poor business performance, the bank reported a pre-tax profit of only 49 billion VND, compared to over 148 billion VND in the same period last year, a decrease of 67%. Correspondingly, the bank's after- tax profit decreased from 116.7 billion VND in the same period last year to 38.9 billion VND.

Non-performing loans surged.

For the first nine months of the year, Vietbank recorded net interest income of VND 1,276 billion, a decrease of 4% compared to the same period last year, mainly due to a decrease in interest income from loans and a decrease in interest income from debt securities trading.

Non-interest income sources also declined, such as service fees (down 5%), foreign exchange trading (down 8%), investment securities (down 32%), and other operating activities (down as much as 52%).

After nine months, Vietbank reported pre-tax profit of nearly 419 billion VND, a 22% decrease compared to the same period last year. Net profit after tax decreased correspondingly from 426 billion VND to 333 billion VND.

In 2023, Vietbank set a target of achieving pre-tax profit of VND 960 billion, a 46% increase compared to 2022. Thus, by the end of the first nine months, Vietbank had already completed approximately 44% of its target.

The bank also aims to expand its market share, increase the size of its total assets both qualitatively and quantitatively, and keep non-performing loans below 3% as stipulated by the State Bank of Vietnam.

However, after the first nine months of the year, Vietbank's total non-performing loans (NPLs) reached nearly VND 2,891 billion, a 24% increase compared to the beginning of the year. Specifically, substandard loans (Group 3 loans) and doubtful loans (Group 4 loans) both increased sharply by 143% and 65% respectively, reaching VND 443 billion and VND 539.8 billion. The NPL ratio increased from 3.65% at the beginning of the year to 4.06%.

As of September 30, 2023, the bank's total assets were recorded at VND 125,079 billion, an increase of 10% compared to the beginning of the year. Of this, deposits at the State Bank of Vietnam increased by 34% to VND 2,389 billion, deposits at other credit institutions increased by 60% to VND 27,687 billion, and loans to customers increased by 12% to VND 71,241 billion.

Customer deposits increased by 13% year-on-year, reaching VND 85,847 billion. Vietbank issued securities worth VND 10,111 billion, a 97% increase year-on-year, mainly in the form of certificates of deposit.

On the stock market, at the close of trading on October 30, VBB shares remained stagnant at 9,900 VND per share, with no trading liquidity .

Thu Huong

Source