More banks report falling profits

Declining core business segments and rising provisioning costs were the two main reasons for the increase in the number of banks reporting lower profits in the third quarter.

The banking industry's profit picture continues to be dominated by red. After VPBank and BacABank, TPBank, NCB, PGBank and LPBank are the next names to record a decrease in Q3 or 9-month profits compared to the same period last year.

In the third quarter, Tien Phong Bank's (TPBank) net interest income still increased by more than 8%, but the impact of high capital costs is becoming evident. The bank's interest expenses in the last three months increased by more than 47%, while interest income and equivalents increased by only more than 27%. Other business components remained positive, with net interest income from investment securities alone increasing dramatically by nearly 80 times over the same period. This helped net operating profit increase by more than 16%.

However, high provisioning costs increased sharply, nearly 4 times higher than the same period last year, causing TPBank's profits to decline. In the third quarter, the bank reported a net profit of just over VND 1,200 billion, down more than 26% compared to the third quarter of 2022. In the first 9 months, TPBank's net profit recorded nearly VND 4,000 billion, compared to more than VND 4,700 billion in the same period last year.

In contrast to TPBank, PGBank and LPBank have the opposite situation. The credit risk provisioning costs of these two banks have decreased, but the decline in their core business segments is even higher.

In the third quarter, all of PGBank's business segments were lower than the previous year. Net interest income decreased by 16% to VND279 billion. Non-interest income sources all decreased, such as service income decreased by more than 40%, foreign exchange income decreased by more than 60%, and income from other activities was only over VND7 billion, compared to over VND30 billion in the third quarter of 2022.

Although provision costs also decreased by 26%, PGBank recorded pre-tax profit of only nearly VND57 billion, down 60% compared to the same period last year.

Similar to LPBank, the bank's two important components, net interest income and service income, were both lower than the same period last year. Revenue from foreign exchange trading and other activities increased, but not enough to offset the overall decline. The bank's net operating income in the third quarter was only over VND1,770 billion, 17% lower than the same period in 2022.

Thanks to a sharp decrease in provisioning costs, LPBank's pre-tax profit in the third quarter was equivalent to last year's, at nearly VND1,000 billion. However, if calculated cumulatively for the first 9 months of this year, the bank's profit decreased by more than 26%, mainly due to a decrease in net interest income.

The worst situation is at National Citizen Bank (NCB). In the third quarter, this bank did not even record interest income - the "main breadwinner" of current banks. Interest expenses were higher than interest income and equivalents, causing NCB's net interest income to be negative by more than VND2 billion.

Profits from other business segments, which are not NCB’s strengths, were not enough to cover operating costs. The bank recorded a VND47 billion decrease in accumulated after-tax profit in the third quarter compared to the same period last year, mainly due to only VND7 billion in net interest income.

The positive point is that NCB's credit expansion is at a faster pace. By the end of the third quarter, the bank's credit increased by more than 8% compared to the beginning of the year.

Meanwhile, BaoVietBank is a rare bank with high business growth, but the cost of credit risk provisions has increased dramatically, causing the bank's profits to remain flat.

In the third quarter, the bank's net interest income increased by nearly 60%, and service revenue tripled over the same period. Together with other business segments, Bao Viet Bank's total operating income reached more than VND630 billion, nearly three times higher than in the third quarter of last year.

However, the sudden high provisioning costs caused the bank's profits to be only equivalent to the previous year. In the third quarter, BaoVietBank recorded nearly VND300 billion in credit risk provisioning costs, nearly 8 times higher than in the third quarter of 2022.

In the first 9 months of the year, the cost of credit risk provisioning was also the biggest highlight, nearly 8 times higher than the same period last year. This result caused BaoVietBank's 9-month profit to narrow to nearly 27 billion VND, a slight decrease compared to last year.

According to the financial statement, this bank has set aside more than VND520 billion in specific provisions for loans in the past 9 months, and used more than VND420 billion to handle overdue debts. At the end of the third quarter, the scale of bad debt (group 3-5) of BaoVietBank recorded more than VND1,530 billion, accounting for nearly 4% of total outstanding loans to customers.

Minh Son

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