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Vietcombank forecast that the profit in the first six months of 2020 would be similar to the same period last year. Photo: Internet.

"Soft landing" but still high

At Vietcombank’s annual general meeting recently, Nghiem Xuan Thanh, Chairman of the Board of Directors, said in 2020, the bank would set a plan for safe, sustainable and effective development, a “soft landing”. In the plan, total assets would increase by about 7%, the outstanding loans by 10%, and capital mobilisation would grow at a moderate rate, about 8%. Profit before tax has not been set a specific figure, but it will be complied with the State Bank’s policy and evolution of the pandemic.

The first six-month result of this bank was expected to be positive. Vietcombank's leaders said as of June 25, the capital mobilisation increased by 3.4%, and credit increased by 3.4% compared to the end of the year. The expected six-month profit was close to the same period in 2019 at about VND11,000 billion.

Similarly, VPBank's 2020 goal is only marginally higher than in 2019. But in the first six months, Nguyen Duc Vinh, VPBank's General Director, said the bank recorded positive results, completing nearly 30% of the year’s plan on profit before tax. Therefore, in the first six months, the bank might reach about VND6,000 billion. If the economic situation and pandemic are not mutated by the end of the year, VPBank's annual business results may exceed the goal.

On expected six-month profit, Pham Quoc Thanh, General Director of HDBank, said initially, the bank's leaders expected the impact of Covid-19 with provisions of up to 15% of outstanding loans, but so far it was less than 4%, so business results would be better. The growth continued to be positive by the end of May. It is expected that individual bank profits before tax will exceed VND2,300 billion by the end of June, up 26% over the same period.

Many other banks also set high expected six-month profits such as VietinBank expected six-month pre-tax profit of VND6,000 billion; ACB was capable of fulfilling at least 50% of the profit plan, pre-tax profit of about VND7,636 billion for the year; SHB saw profit before tax of more than VND1,300 billion after five months, completing 40% of the year’s plan; and Sacombank’s five-month pre-tax profit reached VND1,303 billion, exceeding 50% of the whole year plan.

Outstanding growth at the end of the year?

Although credit growth of the whole industry as well as at each bank has been bleak, the banks’ business results are good. This is because banks have been trying to cut revenue from credit, increase revenue from retail services, insurance, foreign currencies, trade finance and the issuance of valuable papers, as well as achieve good results in banking restructuring.

For example, although Vietcombank’s credit increased more slowly, it was at a high figure compared to the industry average, making its profit results positive. In the second half of the year, the bank must double credit growth, which could cause profits to soar, even beyond US$1 billion in 2019. However, the reason the bank's leaders set high expectations at the end of the year is that bad debts were well controlled, accounting for only 0.82% of outstanding loans, which is better than expected. Moreover, bank profits will increase as Vietcombank will receive big expenses thanks to executing an exclusive agreement with FWD insurance company.

However, with the economic recovery in the remaining months of the year, bank leaders expect a recovery, or even a sharp increase in credit growth in the second half of the year. Therefore, banks are turning the credit structure to diversify their portfolios and diversify revenue sources.

Do Minh Phu, Chairman of TPBank's Board of Directors, said the bank developed loan products for industrial parks to prepare for foreign investment into Vietnam in the near future with careful criteria. VPBank also said the bank had strengths in consumer credit and lending to small and medium enterprises but it had shifted rapidly to home loans and loans to big corporate clients.

According to experts, the corollary from the Covid-19 pandemic will last throughout the year. Facing these challenges, the banking industry, on one hand, must continue to "sacrifice" profits to support the economy, on the other hand, efforts to implement solutions to strengthen platforms to create momentum for development in the following years. Reports of some securities companies forecast that the profit of banks listed on the stock exchange (18 units) this year would drop by at least 10%. However, reality is showing positive results.