Banks report satisfactory profits, increased bad debts

Banks’ finance reports in 2016 show good news and bad news. Most of them had profits higher than the year before, but the number of non-performing loans increased.


Banks report satisfactory profits, increased bad debts

The bank business performance in 2016 has become clearer as more banks have released their financial reports. 
Ten banks, including, BIDV, Vietinbank, Vietcombank, SHB, MBB, Sacombank, ACB, VIB, NCB and Eximbank, reported the total net interest margin in 2016 reaching VND95.538 trillion, an increase of 14.7 percent compared to 2015.
However, the ratio of net interest margin on total income of the banks decreased from 80.47 percent to 79.46 percent. Nine out of 10 surveyed banks showed the decrease in net interest margin. This means that bank income has eased reliance on lending. 
With the net interest margin in 2016 just accounting for 82.5 percent of total income instead of 89 percent as seen in the same period of the year before, Eximbank is one of the banks that had big changes in income structure.
Banks’ finance reports in 2016 show good news and bad news. Most of them had profits higher than the year before, but the number of non-performing loans increased.


The bank received VND3.082 trillion from net interest margin, down by 9.3 percent  compared with 2015. Meanwhile, the net income from forex activities increased from VND62.7 billion to VND260 billion and the stock investments brought profit of VND25 billion while it took a loss of VND34 billion the year before.
Sacombank also sees the proportion of income from credit decreasing from 78.16 percent in 2015 to 72.59 percent (VND5.119 trillion) in 2016.
Bad debt on the rise
Six out of 10 banks, including VIetinBank, BIDV, Eximbank, SHB, VIB and Sacombank, saw the non-performing loan (NPL) ratio increasing.
Sacombank has the highest NPL ratio – 5.35 percent of total outstanding loans, a sharp increase from the 1.86 percent in early 2016. Of this, subprime loans increased by 6.6 times to VND1.525 trillion from VND231 billion in late 2015.
Eximbank ranks second in terms of NPL with the ratio soaring from 1.86 percent in 2015 to 2.95 percent, while VIB ranks third.
This has forced banks to make high provisions against risks. The 10 surveyed banks made provisions of VND27.751 trillion in 2016, an increase of 13.93 percent compared to 2015.
Though the provisioning has eaten into profits, its impact on the banks vary depending on their health.
Excluding BIDV and Sacombank, other surveyed banks all had profit growing by tens of percent. Eximbank, for example, reported profit of VND390 billion, an increase of 542 percent compared to 2015. The two big banks Vietcombank and VietinBank maintained high growth rates of 24.75 percent and 16.1 percent, respectively.


US$1=VND22,000

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Mai Thanh

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