Factors affecting bank profit outlook this year

Major state lender Vietcombank took the lead in the banking sector with a pre-tax profit of $891 million for the first half (H1) of 2023, up 18 per cent on-year. The bank's net interest income surged by 14 per cent over the same period, reaching $1.22 billion, alongside earnings from forex and stock trading.

After posting a 7.1 per cent jump in its consolidated H1 pre-tax profit to stand at $553.6 million, an MB Bank executive revealed that credit expansion was a stellar point during the period as the bank’s consolidated total outstanding balance shot up by 10.6 per cent compared to the start of the year. It also saw a 6.8 per cent surge in the second quarter (Q2) compared to a 3.7 per cent expansion in Q1.

At VPBank, its parent bank’s pre-tax profit was approximately $347.8 million by late June. Its consolidated credit expanded by over 10 per cent during the period.

Although the H1 business results of most banks were healthy, industry experts believe that their projected full-year pre-tax profit may not paint such a rosy picture due to a combination of factors.

Its credit balance from the retail customer segment surpassed $956 million, growing by more than 13 per cent so far this year.

Meanwhile, VIB’s pre-tax profit for H1 surpassed $245 million, up 12 per cent on-year.

Its total operating income approximated $447.8 million, showing an 18 per cent jump on-year, meanwhile non-interest income came to nearly $69.1 million, contributing 15 per cent to the total revenue. The key growth enabler at VPBank was interest payments, which saw a 21 per cent jump during the period to reach $378 million.

TPBank’s H1 financial statement shows that the tech-driven lender eyed a 26 per cent hike in its net income from services, reaching $65 million during the period, while its interest income also reported improvements to reach 28 per cent of the total income structure. The bank’s pre-tax profit was also strong at $147.8 million in H1.

Techcombank marked H1 with its customer count surpassing 12.2 million, of which the lender enticed about 1.4 million new customers during the period with 45.3 per cent of them joining the bank through digital channels and 43.8 per cent by leveraging its partners in the ecosystem.

Although the H1 business results of most banks were healthy, industry experts believe that their projected full-year pre-tax profit may not paint such a rosy picture due to a combination of factors, such as a stronger than expected net interest margin reduction at several banks, a higher than expected bad debt ratio (TPBank, HD Bank), and weaker consumer finance services (VPBank).

In a related development, survey results on the business trends of credit institutions in Q3 conducted by the State Bank of Vietnam's Statistical and Forecasting Department show that credit institutions have significantly lowered their expectations on the business outlook and profit figures for the coming time, in which competition from other lenders is deemed to be the most critical factor for lenders’ performance over the whole of 2023.

Despite a 4.3 per cent reduction in the volume of foreign investment inflows into Vietnam in the first half of the year, experts said there are positive signs when looking into the structure of the investment.

The General Department of Taxation (GDT) in Vietnam has reported that prominent foreign tech companies, including Google, Apple, Facebook, Netflix, TikTok, made substantial tax contributions, amounting to around $166 million during the first half of 2023. This development comes as the tax authority intensifies efforts to streamline tax collection in the rapidly expanding e-commerce sector.

Vietnam International Bank (VIB) recorded profit before tax of over VND5.64 trillion in the first half of 2023, up 12 per cent on-year.

Ho Chi Minh City Development Joint Stock Commercial Bank announced business results for the first half of 2023, with pre-tax profit reaching nearly VND5.5 trillion ($231.6 million), continuing its growth trajectory of the last 10 years.