the health of the Vietnamese banking sector in figures
In the first quarter of 2022, private bank VPBank overtook Vietcombank to become the most profitable bank in Vietnam, with more than VND 11.1 trillion in profit, up almost 2.8 times from the same period of 2021.
Vietcombank recorded a profit of almost VND 10 trillion during this period, up 15% year on year. Techcombank was in third place with nearly VND6.8 trillion, followed by MBBank with over VND5.9 trillion and VietinBank with over VND5.8 trillion. Despite deteriorating asset quality, banking sector profits in the first quarter of the year maintained double-digit growth.
In the first quarter of 2022, the banking system recorded a new race for profits with the change of thrones in many positions. Many state-owned banks have been downgraded and show signs of running out of steam in the renovation process.
While the Foreign Trade Bank of Vietnam (Vietcombank) lost first place in terms of profits, the Joint Stock Commercial Bank of Vietnam for Industry and Commerce (VietinBank) and the Vietnam Bank for Investment and Development (BIDV) also gave way to Vietnam. Technological and commercial JS Bank (Techcombank) and the Military Commercial Joint Stock Bank (MBBank). Remarkably, many banks have seen a big increase in their profits thanks to the royalties of the exclusive cooperation agreement for the distribution of insurance between banks and insurance companies.
After years of stagnation due to internal conflict, Export-Import Commercial Joint Stock Bank of Vietnam (Eximbank) returned and led the rate of profit growth in the first quarter.
Regarding restructuring activities, the State Bank of Vietnam has made plans to operate two “zero VND banks” – Construction Bank (CBBank) and Ocean Bank (OceanBank). Vietcombank and MBBank have been selected to participate in the restructuring of these two fragile banks.
Assets rise sharply
The big banks still retain the strength of their assets. At the end of March 2022, the top 10 banks with the largest assets held more than 8.78 quadrillion VND, or more than 77% of the entire system.
BIDV, VietinBank and Vietcombank rank first with assets ranging from VND 1.46 quadrillion to almost VND 1.85 quadrillion. In the race for assets, MBBank and Techcombank have made strong progress. MBBank ranked 4th with 649 quadrillion VND, followed by Techcombank with 615.2 quadrillion VND.
VPBank, Sacombank, ACB and Saigon Hanoi Bank (SHB) have assets of over VND500 trillion.
In the asset leading group, Vietinbank, Techcombank, MBBank have the high asset growth rate of 8-9%.
The major banks in terms of assets also attracted the most deposits. In the first quarter of 2022, the top 10 banks attracting the most customer deposits held VND 6.5 quadrillion in customer deposits, or almost 79%.
BIDV continued to lead with over VND1.39 quadrillion in customer deposits, followed by VietinBank with over VND1.21 quadrillion and Vietcombank with over VND1.18 quadrillion.
In terms of deposit growth, VPBank ranked No. 1 with 13.4% (over the same period). HDBank ranks second with a 9.9% increase in deposits, followed by TPBank with 9.3%. VietinBank and Vietcombank had a rather low growth rate, around 4%.
While the stock market was shrouded in bad news domestically and internationally, the banking group is seen as a bright spot and a self-fulfilling spot for Vietnam’s stock market in 2022. It is also a major contributor to the earnings of the stock market, with around 40%. Currently, the valuation of bank stocks according to the price/book value (P/B) criterion is at the lowest level since 2015.
According to a report by SSI Securities, the net interest margin (NIM) of some banks increased slightly compared to the previous quarter, ranging from 2.4 to 7.6%. Some banks also benefited from a significant increase in Treasury term deposits and an improvement in the Current Account Savings Account (CASA) compared to the previous quarter.
Recently, interest rates on deposits tend to increase. This can affect banks’ business results. However, some experts believe that interest rates on loans may also increase as a result.
SSI also said the positive business results of Vietnamese banks in the first quarter of 2022 did not fully reflect the impact of recent tightening measures in housing loans and corporate bonds.