A bank staffer counts Vietnamese dong notes.

Banks have posted huge first-half earnings thanks

to expanding credit services - Photo: Le Toan

Vietnam Export Import Commercial Bank (Eximbank) obtained an after-tax profit of VND823 billion in the period, up 15% from the same period last year.

According to its financial report, the bank’s gross revenue from credit operations was VND1.16 trillion, rising 26% year-on-year and accounting for over 80% of the bank’s total operating earnings. Meanwhile, revenue from financial services of the bank in January-June was VND114 billion, which made up only 8.4% of the bank’s earnings despite a 50% year-on-year increase.

Vietcombank and Vietinbank also reported robust profits.

Vietcombank earned VND2.15 trillion in after-tax profit, up 8.7% from the same period last year. Of the number, revenue from credit operations totaled VND4.19 trillion, up 40.7% from a year ago, while its income from services was VND475 billion, up 15% year-on-year.

Vietinbank reported after-tax profits in the first half this year at VND2.37 trillion, equivalent to 60% of its yearly plan.

The after-tax profits of Sacombank shot up by 50% to VND1.03 trillion, and its revenue from credit operations grew 29% and its earnings from services picked up by 19%.

According to experts, banks have earned handsome profits from their credit operations, especially in the second quarter, because they have been permitted to give loans at negotiated rates.

Le Van Thanh Long, head of the research department of SME Securities Co., said banks’ profits in the first half were 1.5 to 2.5 times of the national economic growth, a positive sign for the banking industry.

However, given a strong capital increase at many banks in recent months, the profit growth could not offset bank shares’ earlier dilution, which means lower benefits for shareholders. The earning per share ratios (EPS) of bank stocks have been decreasing gradually, making bank shares unattractive to investors at the moment, he said.

The pressure to raise capital is weighing on many banks in the rest of the year as they have to meet the chartered capital requirement of VND3 trillion by the end of this year.

“Therefore, many investors feel cautious now and temporarily ignore bank stocks,” Long added.

The director of a local fund manager said bank shares were least attractive for short-term investors this time around since those who bought them earlier this year have incurred losses.

Source: Saigon Times