Interest income delivers double digit profit growth for banks
Interest income delivers double digit profit growth for banks
Vietnamese banks have posted double digit profit growth in Jan-Sept 2019, with net interest income accounting for the lion's share. 
Contrary to forecasts that profits of the banking sector had peaked last year, commercial banks' profit figures continued to grow in the first nine months of this year, according to their latest financial statements.
State-owned Vietcombank continued to top the chart with a 9-month pretax profit of VND17.6 trillion ($762.44 million), a year-on-year increase of over 51 percent and higher than the combined profit of the next two banks.
In this period, Vietcombank earned VND25.94 trillion ($1.12 billion) in net interest income, up 27 percent year-on-year and accounting for 74 percent of its net income from all business segments, along with a 12 percent rise in outstanding loans.In second place was Techcombank, the biggest private lender in Vietnam, with a pre-tax profit of VND8.8 trillion ($381.15 million), up 14 percent year-on-year. Techombank had the highest credit growth in the sector at 28 percent, but saw its net operating income fall slightly because it did not receive major windfalls from divestment as it had in 2018.
Three other state-owned banks, Military Bank (MBBank), Vietnam Prosperity Bank (VPBank) and Bank for Investment and Development of Vietnam (BIDV), held the next three positions on the profit ladder.
While MBBank and VPBank registered respective growth of 27 and 24 percent in pre-tax profits, BIDV, one of the three biggest state-owned lenders in Vietnam in terms of assets, saw its profits fall 3 percent because of rising provision costs (money set aside for covering anticipated credit losses).
Private mid-sized banks followed the top 5 on the profit growth table. While ACB registered a 16 percent rise in pre-tax profits, VIB’s rose 69 percent, Sacombank’s by 90 percent and that of TPBank, 49 percent, quickly catching up with the market leaders.
VIB and TPBank also registered the highest credit growth figures in the banking sector, with respective net interest income increases of 28 percent and 34 percent.
Although the State Bank of Vietnam (SBV) is targeting to limit credit growth to 14 percent this year, six out of 22 banks that have published their 9-month financial statements have already passed this limit, with 4 exceeding 20 percent.
However, SBV’s leaders had said they were willing to allow higher credit growth on a case to case basis while generally orientating the sector towards a 14 percent growth.
According to a survey conducted by SBV in early October, 91 percent of credit institutions in the banking system were optimistic their pre-tax profits will grow this year, 6 percent expected it to remain stable, and only 3 percent were concerned about a decline.
