Small banks report losses in Q4/2021 due to high provisions

22-Jan-2022 Intellasia | Dau tu Chung khoan | 5:02 AM Print This Post

Some banks have released their financial statements in the fourth quarter (Q4) of 2021 with reduction in pre-tax profit due to the strong provisions at the end of the year.

Specifically, in the Q4/2021 financial statement of Petrolimex Group Commercial Joint Stock Bank (PGBank), the pre-tax profit recorded a decline of 29.2 percent compared to the same period of 2020, because the bank’s provisioning expenses significantly grew by 235 percent in this period.

PGBank’s net interest income in the last quarter of 2021 was 253.5 billion dong, down by 1.6 percent over the same period of 2020. In the whole year, the bank’s net interest income reached 990 billion dong, up by 9.3 percent over the same period of 2020. Sevice activities also brought about 25.7 billion dong to PGBank in Q4/2021, up by 67 percent over the same period of 2020. In the whole year 2021, the bank attained 48.3 billion dong from service activities, up by 61.1 percent over the same period of 2020.

While the net interest income and service activities of PGBank developed strongly in 2021, the bank’s foreign exchange trading was not positive as the net income from this segment dropped by 31.2 percent over the same period of 2020. The net income from other activities of PGBank in the whole year 2021 also fell considerably by 67.8 percent from 157.5 billion dong in the same period of 2020 to 50.8 billion dong in 2021.

However, despite the decline in Q4/2021, the pre-tax profit in 2021 of PGBank still reached 329 billion dong, up by 55.2 percent over the same period of 2020.

PGBank said that this result was achieved thanks to an increase in net interest income of 84.17 billion dong, equivalent to 9.3 percent over the same period of 2020. In addition, the net income from activities of the bank also grew by 61 percent in 2021. At the same time, PGBank’s the provisioning expenses decreased by 38 percent to 175 billion dong. The bank set a provision of nearly 82 billion dong in the last quarter of 2021 while the provision in the first nine months of 2021 was only 93 billion dong.

As of December 31st 2021, the total assets of PGBank reached 40.613 trillion dong, up by 12.3 percent compared to the end of 2020. In which, the outstanding loans to customers grew by 7.1 percent to 27.499 trillion dong, while the provisions for the risks of customer loans slightly increased by 0.4%. PGBank’s customer deposits decreased by 2.3 percent to 28.075 trillion dong.

In addition, there was a reduction of 6.5 percent (reaching17 billion dong) in the on-balance sheet bad debts of PGBank. As a result, the ratio of bad debts to total loans of PGBank declined from 2.44 percent to 2.24%. However, PGBank’s bad debts at Vietnam Asset Management Company (VAMC) rose by 23 percent to 707 billion dong.

Despite posting a growth of over 37 percent in the Q4/2021 net profit, the strong rise in provisioning expenses pulled the pre-tax profit of Bac A Commercial Joint Stock Bank (BacABank) down slightly compared to the same period of 2020. According to the Q4/2021 financial statement has recently published by BacABank, the bank’s pre-tax profit reached 206 billion dong, down by three percent over the same period of 2020.

The Q4/2021 of BacABank recorded a negative growth because the bank strongly raised its provisioning expenses in the period of 193 billion dong, 2.5 times higher than Q4/2020.

Meanwhile, the net income from business activities of BacABank declined by 7.7 percent to 554 billion dong, but the non-interest income nearly doubled to 178 billion dong.

In which, the net income from trading of investment securities of BacABank increased by 177.8 percent to 45.3 billion dong, while the income from service activities and other activities grew by respectively 119.8 percent and 91.4 percent to 19.4 billion dong and 68.2 billion dong, respectively. Along with that, the operating costs were cut by 17 percent to 333 billion dong.

Nevertheless, in the whole year 2021, BacABank still recorded a pre-tax profit of 908 billion dong, up by 23.6 percent compared to 2020, completing 100 percent of the set plan.

As of December 31st 2021, BacABank’s total assets increased by 2.2 percent compared to the beginning of the year to 119.792 trillion dong. In which, the outstanding credit growth was 6.5%, reaching 84.598 trillion dong. The bad debt ratio slightly declined from 0.79 percent to 0.77%.

At the same time, with the increase of credit risk provisions by 29 percent to 1.060 trillion dong, BacABank’s bad debt coverage continued to improve from 130.8 percent to 161.7%.

In terms of capital, in the past year, the customer deposit balance grew by 8.1 percent to 93.440 trillion dong, in which the demand deposits accounted for 3.048 trillion dong (3.2%) and term deposits accounted for 90.319 trillion dong.

Strong differentiation to be recorded

Viet Capital Commercial Joint Stock Bank (VietCapitalBank) has announced its Q4/2021 financial statement with a pre-tax profit of up to 74 billion dong. In the quarter, the bank’s credit saw a good growth of 16.5 percent but there was insignificant increase in non-interest income.

Specifically, the net interest income of VietCapitalBank in the last quarter of 2021 reached 358 billion dong, up by 14.7%. The bank’s net income from service activities was 19.4 billion dong, insignificantly up compared to the same period of 2020. The net income from other activities of VietCapitalBank fell by 44 percent over the same period of 2020, reaching only 19.5 billion dong.

While the income from non-interest business activities did not see strong growth, the operating costs of VietCapitalBank rose by 33.7%. At the same time, the provisioning expenses also increased by 35 percent to 128 billion dong compared to the same period of 2020.

After deducting costs, VietCapitalBank recorded a pre-tax loss of up to 74 billion dong in the last quarter of 2021. However, thanks to the positive business results in the first three quarters of the year, the bank still recorded good profit growth in the whole year 2021.

Specifically, in all four quarters of 2021, VietCapitalBank recorded a net income of 1.435 trillion dong, up by 30 percent compared to 2020. The net income from service activities was 71 billion dong, up by over 18%. The net income from foreign exchange trading of VietCapitalBank in 2021 was 33 billion dong, down by nearly 11%. Meanwhile, the bank’s net income from the trading of investment securities was 142 billion dong, down by 13 percent over the same period of 2020. The net income from other activities only recorded slight increase. As the provisions for the whole year 2021 of VietCapitalBank only increased by 6.6%, its pre-tax profit reached 311 billion dong, seven percent higher than the plan.

As of December 31st 2021, the total assets of VietCapitalBank were 76.5 trillion dong, up by 25 percent compared to 2020, completing the year plan. The outstanding credit growth was over 16%, in which, the lending to motorbike and automobile repair, retail sale and wholesale accounted for the largest proportion (26 percent of the bank’s total outstanding credit balance), followed by the outstanding loans to real estate business with a proportion of 15.5%.

The bad debt ratio of VietCapitalBank by the end of 2021 was 2.5%, significantly down compared to the 2.93 percent recorded in the end of Q3/2021.

According to the banking industry update report, Viet Dragon Securities Company (VDSC) expected the banking business in 2022 to generally remain positive. In which, the group of state-owned banks will see a differentiation in growth rate with quarterly high volatility. The group of private joint stock banks is forecast to record a gradual recovery rate towards the end of the year, with profit point expected to be in Q2 and Q3 of 2022.

Specifically, experts predicted that the group of large private joint stock banks will have faster and better profit growth than small-scaled private joint stock banks. The supporting factors include dividend payment, private placement, capital increase, foreign ownership cap loosening and bancassurance upfront fee differentiation, but still focus on the group of banks from medium size and above.

 

Category: Finance, Vietnam

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