Trillions deposited in the bank, tycoon narrowly escapes loss

Long Hau Industrial Park real estate developer no longer generated revenue from land rentals in the third quarter, while in the same period last year it still earned more than 100 billion VND. Revenue mainly comes from renting factories, accommodation, shopping centers and other activities.

This situation caused Long Hau's revenue to plummet 62% in the most recent business quarter. Pre-tax profit also decreased 59% to below 42 billion VND.

It is worth noting that this profit has an important contribution from financial revenue (all of which is interest on bank deposits) with more than 24 billion VND, an increase of 74% compared to the same period last year and accounting for more than half of the profit. The company benefits from the high interest rate environment while maintaining a bank deposit balance of nearly 1,100 billion VND.

In the first 9 months of the year, this industrial park company recorded a halving of revenue to less than 250 billion VND (due to almost no land rental revenue in the second and third quarters). Pre-tax profit decreased by 38% to 133 billion VND, including a large contribution from bank interest of more than 57 billion VND.

Fertilizer giant Ca Mau Nitrogen is even more dependent on interest from bank deposits. The fertilizer company had a negative business quarter with revenue down 9% and profit plummeting 87%, down to VND3,150 billion and VND105 billion respectively, the lowest levels in 11 quarters.

In fact, Ca Mau Fertilizer could have even suffered losses if it had not had a sudden increase of 150% in financial revenue compared to the same period to VND200 billion (including more than VND150 billion in deposit interest and the rest in exchange rate difference interest).

The company acknowledged that favorable financial revenue was one of the bright spots in its operations, alongside increased sales volume. However, a sharp drop in fertilizer prices and a sharp increase in sales costs have made the results less positive.

Ca Mau Fertilizer still maintains a balance of nearly VND9,800 billion in bank deposits and is the main contributor to business targets. The company's pre-tax profit in the first 9 months of the year reached VND714 billion, of which VND400 billion was interest on bank deposits.

CRV Real Estate - a real estate company belonging to the Hoang Huy Group ecosystem of Mr. Do Huu Ha - is similarly having to "live off" bank interest. This unit recorded a 16% increase in financial operating profit to over VND92 billion (all from deposit/loan interest).

This figure is significant because it contributes the most to the pre-tax profit of VND 108 billion in the period of July 1 - September 30, 2023 of CRV Real Estate, equivalent to a contribution rate of up to 85% to profit.

In fact, the main contribution in recent quarters still comes from interest income from deposits/loans and vice versa, there is no financial cost. The company currently has a bank deposit balance of VND 4,576 billion, enjoying interest rates ranging from 3.4-11%/year.

Target (billion VND)	Deposit/loan interest (III/2023)	Deposit/loan interest (III/2022)	Profit before tax (III/2023)	Profit before tax (II/2022)
FPT Telecom	263	198	785	723
Duc Giang Chemicals	169	82	863	1,596
Ca Mau Fertilizer	150	67	105	786
Vefac	150	136	145	102
CRV Real Estate	92	79	108	87
Hau Giang Pharmaceutical	54	32	187	290
Agribank Insurance	46	33	71	86
Long Hau	24	14	42	102

Vietnam Exhibition Fair Center Joint Stock Company (Vefac) - a subsidiary of Vingroup - is facing difficulties in its main operations, the source of revenue to sustain the business still mainly relies on idle deposits invested in bonds and loans to partners.

According to the third quarter report, Vefac recorded interest on deposits, bonds and loans exceeding VND150 billion, an increase of 10% compared to the same period. Currently, the company mainly invested VND1,657 billion in bonds to earn interest at 8.5%/year and lent VND3,391 billion to other businesses at an interest rate of 12%/year.

Some other businesses are also showing that profits from deposit/loan interest contribute significantly to overall business results such as FPT Telecom, Agribank Insurance, Hau Giang Pharmaceutical or Duc Giang Chemicals...

According to the State Bank, total savings deposits in banks as of August reached over VND12.4 quadrillion. Of which, deposits from residents increased by 9.68% to about VND6.43 quadrillion and businesses increased their savings balance by 1% to over VND6.01 quadrillion.

Real estate giants rush to absorb trillions, reducing pressure on the bond market Many Vietnamese real estate giants have mobilized thousands of billions more to settle previous bond debts. Some businesses have completely settled their debts, but some corporations need more time to restructure.

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