Many banks still struggle with forex trading despite favourable foreign exchange developments

16-Nov-2019 Intellasia | Vietnam Finance | 6:02 AM Print This Post

The favourable exchange rate developments helped the total net profit from foreign exchange trading of 28 banks grow strongly in the first nine months of this year. However, in terms of quantity, only a few banks have taken advantage of this opportunity, mainly large-scale banks.

Statistics of Saigon Securities Incorporation (SSI) showed that the difference between buying and selling exchange rates of banks has reached up to 150 dong per US dollar, the biggest gap in recent years.

SSI emphasized that since the US-China trade war broke out in 2018, the gap between buying and selling exchange rates of banks has constantly been widened compared to the 70 dong per US dollar recorded in the past.

“This is how commercial banks minimise risks in foreign exchange activities when the international context is unpredictable,” SSI explained.

However, the actual movements of dong have been fairly stable. In addition, the buying exchange rates of bank are currently much lower than the buying rate of the SBV which has been maintained at 23,200 dong per US dollar from the beginning of the year.

“Thanks to that, the foreign exchange activities of 18 commercial banks in the first nine months of 2019 brought an income of 6.460 trillion dong, up by 37.6 percent over the same period of 2018,” said SSI.

Statistics of VietnamFinance from 28 commercial banks also pointed out that the total net profit from foreign exchange activities in the first nine months increased by up to 24 percent over the same period of last year, reaching 6.922 trillion dong.

If excluding the banks which posted net loss (including National Citizen Commercial Joint Stock Bank (NCB), Vietnam International Commercial Joint Stock Bank (VIB) and Vietnam Prosperity Commercial Joint Stock Bank (VPBank)), the total net profit growth from foreign exchange trading in the first three quarters of 2019 was 33%, reaching 7.160 trillion dong.

However, the joy is not for all.

Among 28 banks, up to 15 banks experienced decline in net profit from foreign exchange trading. In other words, they saw negative growth in the first three quarters of this year.

As mentioned in the above, three banks recorded net loss, including NCB (five billion dong), VIB (115 billion dong) and VPBank (117 billion dong). Of which, VPBank is a “tragic” case as it attained a net profit of up to 251 billion dong in the same period of last year.

Some notable cases which saw reduction in net profit from foreign exchange trading can be named as Vietnam Technological and Commercial Joint Stock Bank (Techcombank, down by 44 percent to 138 billion dong), Maritime Commercial Joint Stock Bank (MSB, down by 67 percent to 98 billion dong), Orient Commercial Joint Stock Bank (OCB, down by 21 percent to 79 billion dong), Saigon Commercial Joint Stock Bank (SCB, down by 55 percent to 51 billion dong), Viet Capital Commercial Joint Stock Bank (VietCapitalBank, down by 83 percent to 19 billion dong), or Southeast Asia Commercial Joint Stock Bank (SeABank, down by 79 percent to 15 billion dong).

Asia Commercial Joint Stock Bank recorded a modest decline of just five percent, reaching 291 billion dong.

Being ahead of ACB is the top five banks including Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Military Commercial Joint Stock Bank (MB) and Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank). All of them recorded high net profit growth from foreign exchange trading. In which, VietinBank saw a growth of up to 120 percent to 1.189 trillion dong in the first nine months of the year, reaching the second position in net foreign exchange trading profit among joint stock banks.

BIDV fell to the third position with a growth of only 35%, with 1.077 trillion dong.

The top position continued to be held by Vietcombank with a nine-month net profit reaching up to 2.536 trillion dong, up by 58 percent over the same period of last year.

MB and Sacombank also saw sharp rise in net profit from foreign exchange trading of respectively 56 percent and 35%, reaching 472 and 422 billion dong, respectively.

In addition, two banks that also recorded high profit growth in foreign exchange business are Export Import Commercial Joint Stock Bank (Eximbank) and HCM City Development Commercial Joint Stock Bank (HDBank) with growth rates respectively reaching 56 percent and 36%, being 232 billion dong and 175 billion dong.

 

Category: Finance, Vietnam

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