Banks still make big profits from interest rate difference

05-Dec-2021 Intellasia | Dau tu Online | 11:36 AM Print This Post

The income from securities trading and services increased, but the biggest contributor to the banks’ profits was still the net-interest income of credit activities.

Positive collection of net-interest income

Orient Commercial Joint Stock Bank (OCB) continued to maintain a positive growth momentum thanks to the application of digitisation to reduce costs. The bank’s total net income in the third quarter (Q3) of 2021 increased by 23.3 percent year-on-year to 6.243 trillion dong, in which the net interest income and non-interest income both recorded positive growth. The positive factors from business activities helped OCB’s pre-tax profits reach 3.768 trillion dong, up by 50 percent year-on-year.

According to general director of OCB Nguyen Dinh Tung, one of the factors that helped the bank maintain a positive level in the first three quarters of 2021 is the good control of the Cost to Income Ratio (CIR). This rate decreased from 31.9 percent in the same period of 2020 to 29.1 percent in Q3/2021.

In the report analysing OCB’s operation, Saigon Securities Incorporation (SSI) also said that the bank has well controlled the CIR. OCB is currently among the banks with the lowest CIR thanks to the investment in digitisation since 2018.

The credit activities brought 6.515 trillion dong of net interest income to Military Commercial Joint Stock Bank (MB) in Q3/2021, up by 26 percent year-on-year. In the first nine months of this year, the bank’s net interest income reached over 19 trillion dong, up by 31 percent year-on-year.

The highlight in MB’s financial picture in Q3/2021 as well as in the first three quarters of 2021 was the increasingly effective cost management capacity. While the bank’s Q3/2021 total operating income reached 7.027 trillion dong, up by 27.6 percent year-on-year, the total operating expenses in Q3/2021 was 2.177 trillion dong, down by 1.1 percent compared to Q3/2020.

Meanwhile, in the first nine months of 2021, the net interest income of Vietnam International Commercial Joint Stock Bank (VIB) rose by 42 percent year-on-year to over 8.416 trillion dong. In which, the income from services only increased by nine percent, and the income from other activities declined by 34 percent year-on-year. As a result, the bank reported a pre-tax and after-tax profit increase of 33%, reaching respectively 5.339 trillion dong and 4.272 trillion dong.

Low cost of capital

For Asia Commercial Joint Stock Bank (ACB), the amount of interests the bank lowered for customers was 203 billion dong, while this number of Vietnam Technological and Commercial Joint Stock Bank (Techcombank) was 243 billion dong. However, the two banks still reported impressive profit results in the first nine months of 2021.

Specifically, by the end of Q3/2021, Techcombank attained 17.1 trillion dong of pre-tax profit compared to the year target of 18.9 trillion dong. The credit grew by 15.7 percent compared to the beginning of the year, making the bank’s net interest income to reach 6.742 trillion dong, up by 31.3 percent year-on-year.

Meanwhile, ACB recorded 9.968 trillion dong of pre-tax profit, completing 85 percent of the year plan, although its credit growth was only eight percent. In which, the bank earned over 4.520 trillion dong of net interest income, up by 24 percent year-on-year.

Thanks to the low capital costs, the increase in Current Account Savings Account (CASA) ratio, and the good control of capital costs, banks reaped positive profits in the first nine months of this year and are confident with their business targets set for the whole year 2021, despite the lending interest reduction.

At the recent meeting with individual investors, Techcombank’s Standing deputy general director Phung Quang Hung said that the bank’s CASA in Q3/2021 reached 155 trillion dong, up by 25 percent year-on-year and by 10 percent compared to the whole industry.

In fact, the bank with higher the CASA ratio will have more advantage in the lending interest rate competition and more opportunities to improve its Net Interest Margin (NIM). According to Viet Capital Securities Company, thanks to the strong CASA growth, the NIM of ACB in the first three quarters of 2021 reached 4.1%, the highest in recent years.

Meanwhile, OCB’s general director Nguyen Dinh Tung said that the digitisation has helped OCB lower its operating costs and improve asset quality, contributing to reduce provisioning expenses and also the credit expenses. These are the main factors making the bank’s profit, although OCB has been launching many programmes and policies to share difficulties with customers affected by the Covid-19 epidemic.


Category: Finance, Vietnam

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