31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Banking & Finance
Banks report higher profit in 2020
Ngoc Thuy - Thao Nguyen 14:38, 2021/01/07
The banking sector is set to have a bright outlook in case the economy return to the uptrend growth.

Despite a difficult economic year caused by the Covid-19 pandemic, Vietnam’s banking sector continued to post positive performance, which lays a solid foundation for banks to gain strong growth in 2021.

 Customers at VIB bank. Photo: Tran Viet. 

In early 2021, TPBank became the first bank releasing the financial statement for last year. The local lender’s asset value surged 24.47% year-on-year to VND206.3 trillion (US$8.97 billion), exceeding 14% of the year’s target.

Thanks to effective cost-saving measures and the adoption of digital banking, TPBank’s pre-tax profit expanded by 11% year-on-year and stayed above 8% of the year’s plan.

Other banks such as Sacombank, VIB, or LienVietPost Bank have also attained their respective profit targets in 2020. Among those, VIB completed its profit target 2 months in advance with VND4.56 trillion (US$198.5 million) in just 10 months, exceeding the profit of VND4.08 trillion ($177.6 million) in 2019.

LienVietPostBank also realized its profit target in nine-month period attaining VND1.74 trillion ($75.7 million), up 6.4% year-on-year.

CEO of ABBank Le Hai said the bank is on track to exceed all targets set at the shareholder meeting with a pre-tax profit of VND1.37 trillion ($59.6 million) as of November 2020, 1% above the profit target for the year.

With 2020 being the deadline for banks to meet requirements on capital adequacy ratio (CAR) under Basel II standards, a number of banks, including SHB, LienVietPostBank and HD Bank, have all announced their qualification for the requirements in the final days of 2020.

Bad debts remain a concern

While most banks have seen their profits growing, bad debts remain a major concern. At Vietcombank, the bad debts as of third quarter 2020 surged 36% against the beginning of the year to VND7.88 trillion ($340.5 million).

MBBank also faces a similar situation with its bad debts rose by 39% to VND4.03 trillion ($174.1 million), taking the ratio of bad debts to total outstanding loans to 1.5% from the previous 1.16%.

The BIDV is increasing its provision to settle the debt amount of VND4.6 trillion (US$198.8 million) in the third quarter of 2020, up 84.7% against the previous quarter and 42% year-on-year.

Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong said the total amount of bad debt from 14 out of 16 commercial banks rose by 30% in the first nine months of 2020. The figure, however, is set for further increase as the economy continues to be under pressure from the Covid-19 crisis.

In 2021, risks of bad debts at banks could become clearer as the Covid-19 pandemic expected to persist for a longer period.

Banking expert Nguyen Tri Hieu predicted the banking sector to have a bright outlook in case the economy subject for a strong rebound.

“Bad debts, however, could be a major risk that banks should be cautious about,” Mr. Hieu noted.

RELATED NEWS
TAG: banking credit TPBank Vietinbank BIDV uptrend growth covid-19 coronavirus nCoV pandemic
Other news
17:31, 2022/31/19
11 Vietnamese scientists named for world research
All rated Vietnamese scientists are working at universities, including Vietnam National University and Ton Duc Thang University.
18:21, 2022/21/08
Vietnam's positive outlook lures foreign investors back to stock market
The central bank’s flexible management of monetary policy and the return of capital into markets around the world would have positive impacts on Vietnam’s market.
20:42, 2022/42/04
Banking industry urged to complete digital transformation legal framework
The banking industry needs to continue investing in shared payment and credit information infrastructures.
15:40, 2022/40/04
VND remains most stable currency in region: Report
With the internal strength of the currency and the central bank's flexible management, the VND is expected to depreciate by a maximum of 3% in 2022.
13:07, 2022/07/31
Big techs pay Vietnam US$20 million in taxes in three-month period
Vietnam is now among the first four Southeast Asian countries collecting taxes from offshore service providers that currently do not have a representative office in the host country.
10:01, 2022/01/29
Vietnam’s consumer demand for gold surges 11%
The surge in gold demand comes from fears of inflation and the weakness of the Vietnamese dong.