Many banks’ profits went backwards

While most banks reported profit growth in the first 6 months of the year, the business results of the Export-Import Bank (Eximbank), Saigon Thuong Tin Bank (Sacombank), and Saigon Bank for Industry and Trade (Saigonbank), Loc Phat Bank (LPBank) is “upstream”.

In the last 6 months, Saigonbank’s pre-tax profit decreased by more than 70% over the same period. Eximbank’s profits decreased by more than half. Sacombank’s profits decreased by nearly 44%. LPBank had the mildest decrease, 3% lower than the same period.

Except for LPBank, which recorded good credit growth, Sacombank, Eximbank and Saigonbank almost did not expand their credit portfolios in the first half of the year. Outstanding customer loans of these three banks are only 1-2% higher than at the beginning of the year.

The sharp increase in risk provision costs is also the main cause of “eroding” profits. Sacombank is the bank that makes the most “huge” provisions. In six months, this bank’s credit risk provision expense was 6.5 times higher than the same period. At LPBank and Eximbank, provision costs also increased sharply by more than 130%.

The quality of assets shown on the financial statements is also worse when the bad debt ratio of these banks all increased, or went flat compared to the beginning of the year.

In addition, pressure on mobilization with higher capital costs puts pressure on the profit margins of the banking group in general. Considering each unit individually, Saigonbank recorded the least positive business results when all main sources of revenue declined. Pre-tax profit at the beginning of the year only reached 48 billion VND.

In the first half of this year, Sacombank focused on mobilizing while not promoting lending. Service activities bringing in revenue doubled in the first 6 months of the year, reaching nearly 4,000 billion VND. In the first half of the year, Sacombank’s pre-tax profit was 4,136 billion VND.

At Eximbank, credit growth was low while customer deposits also decreased by nearly 4% compared to the beginning of the year. Net profit from services in the second quarter dropped more than 60%, the foreign exchange business also recorded a net loss. This bank recorded a profit of 678 billion VND in 6 months,

LPBank is the most positive case of the group with pre-tax profit of 5,973 billion VND. Although six-month profit decreased slightly, in the second quarter alone, the bank still had pre-tax profit of VND 3,147 billion, an increase of about 5% over the same period. The results were supported by the improvement of non-interest income, in which net profit from service activities increased sharply from VND 1,680 billion to VND 2,580 billion.

Business results were less prosperous compared to the general level in the context that three of the four banks above have recently experienced major changes in the upper layer.

Eximbank moved its headquarters to Hanoi from the beginning of the year, changing senior leadership team after the appearance of major shareholder Gelex Group.

Sacombank is in the process of restructuring with the appearance of Mr. Nguyen Duc Thuy. The bank received a series of major changes from changing its name, personnel apparatus, and moving its headquarters to Hanoi.

Previously, Mr. Thuy withdrew capital from LPBank and was no longer on the list of shareholders holding 1% of capital. By mid-year, Mr. Pham Nhat Vuong and his wife in turn bought LPB shares, currently directly owning a total of about 9.85% of this bank’s capital.