Bad debt at ACB increased sharply by 93% compared to the end of 2022

Asia Commercial Joint Stock Bank (HoSE: ACB) has just announced its business results for the fourth quarter and the entire year of 2023. Accordingly, the bank recorded net interest income of VND 6,289.6 billion, down 2.5% year-on-year. Non-interest income sources also recorded inconsistent increases and decreases. Specifically, ACB's net interest income from service activities decreased by 22% year-on-year to VND 727 billion.

Net profit from foreign exchange trading activities decreased sharply by 94% from nearly VND504 billion in the same period last year to nearly VND29 billion.

Other activities caused the bank to lose 13.7 billion VND, while in the same period last year, this segment brought ACB a profit of more than 140 billion VND, mainly due to income from capital contributions to buy shares falling sharply from 13 billion VND last year to nearly 1.9 billion VND.

The only bright spot was the investment securities trading segment with a net profit of more than VND1,358 billion, while in the same period last year, this segment caused ACB to lose VND2.7 billion. This was also the main source of revenue for the bank in the fourth quarter.

During the period, ACB's other operating expenses increased 10 times compared to the same period last year to more than VND230 billion. The company reduced operating expenses from VND4,064 billion in the same period to VND3,013 billion. As a result, ACB's net profit from business activities in the fourth quarter increased by 39% to VND5,365 billion.

The bank has strengthened its shield against bad debt by increasing its credit risk provisioning costs to VND321.6 billion, up 28% year-on-year. However, ACB still reported pre-tax profit of VND5,043 billion and post-tax profit of VND4,006 billion, up 39% year-on-year.

Accumulated for the whole year of 2023, ACB recorded net interest income of VND 24,959 billion, an increase of 6% compared to 2022. Similar to the fourth quarter, investment securities trading activities continued to bring the bank a profit of VND 2,647 billion, a sharp increase compared to the profit of VND 20.6 billion in the previous year.

According to the bank's financial statement, ACB has a total of VND73,463 billion in investment securities, including nearly VND44,904 billion in available-for-sale securities and nearly VND28,560 billion in held-to-maturity securities.

By the end of 2023, ACB's net operating profit increased by 27% to VND21,872 billion. Although the bank's credit risk provisioning costs increased sharply from nearly VND71 billion to VND1,804 billion, ACB still reported pre-tax profit of VND20,068 billion and after-tax profit of nearly VND16,045 billion, up 17% compared to 2022.

In 2023, ACB set a pre-tax profit target of more than VND 20,000 billion. Thus, by the end of the year, the bank had completed its set target.

As of December 31, 2023, ACB's total assets were VND718,794 billion, up 18% compared to the beginning of the year. Of which, deposits at other credit institutions increased by 39% to VND114,644 billion; loans to other credit institutions decreased sharply by 92% to nearly VND280 billion.

The bank's securities trading segment also increased from VND1,131 billion to VND7,177 billion, mainly securities issued by other domestic credit institutions with VND4,000 billion. Customer loans reached VND482,235 billion, up 18% over the previous year.

In 2023, customer deposits at ACB were VND 482,703 billion, up 16%; deposits and loans from other credit institutions of ACB reached VND 89,506.6 billion, up 32% over the previous year.

Regarding loan quality, ACB's total bad debt at the end of the year was recorded at VND5,887 billion, an increase of 93% compared to the end of 2022. Of which, doubtful debt (group 4 debt) increased the most, 2.3 times higher than the previous year to nearly VND1,049 billion; substandard debt (group 3 debt) also increased by 112.6% to VND940 billion, and debt with the possibility of losing capital (group 5 debt) increased by 80% to nearly VND3,898 billion. As a result, the ratio of bad debt/outstanding loans increased from 0.74% to 1.22% .

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