Banks still register encouraging performance amid COVID-19

VPBank reports encouraging business results in the first quarter in credit growth, revenue, and consolidated profit

Nguyen Duc Vinh, CEO of VPBank has just sent a letter to shareholders, detailing the unprecedented adverse impacts the coronavirus (COVID-19) outbreak has cast across the board.

Vinh noted in the letter that despite the pandemic, VPBank has managed to post encouraging business outcomes in the first quarter of this year in credit growth, revenue, and consolidated profit.

However, he warned that as the pandemic remains a significant and unpredictable variable, reaching the full-year business targets would be a challenging task for the bank and that he expects COVID-19 to be contained in the second quarter.

Do Anh Tuan, deputy chairman of Techcombank, another privately-held bank, disclosed that despite COVID-19, the bank has been honing on quarterly projections.

Tuan said that the pandemic began in February and the bank saw fair credit growth in January by virtue of soaring customer demand ahead of the traditional Lunar New Year, and this would make up for the remaining months of the first quarter.

Techcombank posted nearly VND13 trillion ($565.2 million) in pre-tax profit last year. However, it will not diclose its profit targets for 2020 until its annual general shareholders' meeting which was delayed to June 2020 instead of the proposed late March.

Leveraging the recently-released banking sector perfomance assessment report by SSI Research, a subsidiary of SSI Securities Corporation, TPBank’s pre-tax profit in the first quarter was forecast at about VND1 trillion ($43.48 million), a 17.3 per cent jump on-year which came by virtue of raising credit and deposit by 9 and 6 per cent, respectively, compared to early 2020.

Meanwhile, also according to SSI Research, the pre-tax profit of state-owned Vietcombank was forecast to reach VND6.1 trillion ($265.2 million), up 3 per cent on-year, after gaining 3 and 2 per cent in credit and deposit volumes compared to early 2020.

Taking the lead with a forecast 30 per cent on-year growth in first-quarter pre-tax profit is privately-held Vietnam International Bank (VIB), surpassing VND1 trillion ($43.48 million).

Meanwhile, with fair credit growth of nearly 6 per cent in the first quarter and earnings from its bond investment portfolio in the first two months of this year, VPBank is expected to post double-digit profit growth in the first quarter.

SSI Rearch has also estimated the pre-tax profit in the period of Ho Chi Minh City-based commercial lender ACB at about VND1.8 trillion ($78.26 million), up 5 per cent on-year.

For Military Bank (MB Bank), SSI Research forecast an increase in provisioning in the first quarter this year to create a safe buffer for operations in the subsequent quarters. This would lead to 30-35 per cent hike in provisioning. The bank’s pre-tax profit in the period, therefore, is foreast to remain almost unchanged or see a slight decrease of 0.5-0.7 per cent compared to the corresponsing period last year.

Banks are expected to deliver their official reports on first-quarter business results later this month or at their upcoming annual general shareholders' meetings which might include new business indexes to supersede ones which were established at the beginning of the year when the COVID-19 situation was not too critical.

According to Nguyen Quoc Hung, head of the Credit Department of the State Bank of Vietnam (SBV), the banking sector’s credit expanded by 1.3 per cent as of March 31, 2020. Earlier, the sector’s credit growth was just 0.06 per cent, a six-year record low due to the COVID-19.

According to the SBV's preliminary assessment, as COVID-19 disruptions unfolded in full from mid-March, its impacts on the performance of most banks will not be felt in the first quarter.

SSI Research’s update report on the implications of COVID-19 on the banking sector has revised the pre-tax profit prospects of 10 large-scale banks in a negative direction.

Along with this, in the base scenario, if the pandemic was brought under control late in the second quarter, the pre-tax profits of these banks would jump 7.2 per cent on-year, and in the worst scenario that the pandemic remains out of control until the end of the year, the growth level would be 0.8 per cent only.