Lending slows down, banks still make big profits thanks to other income 8

Lending slows down, banks still make big profits thanks to other income 8

Banks' net profit growth in the first half of 2018 was mostly lower than the increase in pre-tax profits.

Nearly half of the banks in the system have announced business data for the first half of 2018, with the overall situation being relatively positive.

However, a characteristic maintained from the first quarter until now is that the profit growth of banks is mostly higher than the growth of net interest income, income from loan interest is considered the main `rice cooker`.

Considered the `big brother` of the banking system, Vietcombank’s pre-tax profit in the first half of 2018 reached more than VND 8,000 billion, equivalent to 60% of the year’s plan and an increase of 53% compared to the same period in 2017. With the operating low point

Like the first quarter of 2018, the growth driver for this bank is divided into other revenues, besides net interest income.

Other activities, partly coming from the recovery of processed debts, brought Vietcombank nearly 2,400 billion VND in the first 6 months of the year, an increase of 162% compared to the same period in 2017. Revenue from divestment also doubled.

However, despite strong profits, Vietcombank’s total assets fluctuated in the opposite direction, falling below one million billion VND for the first time since the beginning of 2018. By the end of the second quarter, the bank’s total assets decreased by nearly 60,000 billion VND compared to

In the capital source, the biggest change for Vietcombank is the State Treasury’s deposit target, down nearly 100,000 billion VND compared to the end of 2017. Correspondence in assets, deposits and loans to credit institutions

The lack of deposits from the State Treasury may be the reason Vietcombank narrowed its interbank operations, and the capital market maintained a fairly low interest rate since the beginning of the year.

Non-interest revenues are increasingly contributing to banks’ profits.

VPBank – the second most profitable bank in the list of banks publishing financial statements, also had similar fluctuations.

The extraordinary amount for VPBank is other income reaching nearly 1,600 billion VND, more than double over the same period.

In the system, VPBank is always ranked at the top of the banks that make the most provisions, partly due to the high risk appetite of FE Credit financial company (a subsidiary of VPBank).

After being processed, debts are placed on the off-balance sheet for monitoring and can become a source of sudden profits when recovered, as in the early part of 2018.

However, VPBank’s business results did not meet expectations when it only completed 41% of the year’s plan.

In the lower group, MB also shared the same `scenario` when the bank increased profits partly thanks to high growth from service activities and other profits.

However, VIB and LienVietPostBank are probably two rare cases that go against the trend.

VIB recorded more than 1,150 billion in pre-tax profit, three times higher than the same period thanks to high growth in net interest income, while other activities did not have many mutations.

LienVietPostBank is the only case whose pre-tax profit decreased over the same period.

The main reason, according to the bank’s explanation, is the provisioning for investment securities and increased operating costs due to branch network expansion.

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