Gradually "revealing" business results, bad debts of some banks increased

LPBank's profit in the first 6 months of 2023 dropped sharply while bad debts increased. Photo: ST

Increased interest expenses affect profits

Up to now, a number of banks have announced their business results for the second quarter and the first six months of 2023, in which some banks strongly increase in profit but others have a decrease in profit.

Specifically, as of June 30, 2023, Sacombank's pre-tax profit reached VND 4,755 billion, up 63.5% over the same period; followed by PGBank with a pre-tax profit of VND 303 billion, up 24% compared to the same period in 2022.

In addition, a number of banks had "gentle" profit growth such as MSB reaching VND 3,548 billion, up 6% over the same period last year; BacABank reached VND 474 billion, an increase of 10% compared to the first 6 months of 2022, although the profit decreased by 25%in the second quarter of 2023.

On the other side, due to a significant decrease in net interest income and a sharp increase in provisioning, ABBank's 6-month accumulated profit after tax reached more than VND 541 billion, down sharply by 59% compared to more than VND 1,328 billion of the same period in 2022, especially the profit in the second quarter of 2023 plummeted by 94% when only recorded only VND 52.5 billion.

The explanation report of LPBank said that the high deposit interest rate partly affected the bank's net profit margin (NIM), causing interest income to decrease compared to the same period last year. Therefore, the bank's profit after tax reached more than 1,951 billion dongs in the first 6 months of the year, down nearly 32% compared to more than 2,855 billion dongs achieved in the same period last year.

Similarly, although it recorded a large income from investment securities trading in the second quarter of 2023, according to TPBank's explanation, in the difficult economic context, lending interest rates tended to decrease while the high-interest rate on long-term deposits caused the bank's profit after tax in the second quarter of 2023 to decrease by more than 25% compared to the same period last year. In the first 6 months of the year, TPBank recorded a profit after tax of more than VND 2,706 billion, down more than 10.6% compared to the same period in 2022.

Simultaneously increase the volume of bad debts

In addition to "less bright" profits, the bad debt situation of banks is also at an alarming level.

At TPBank, by the end of the second quarter of 2023, bad debt increased nearly 3 times compared to the beginning of the year to 3,912 billion dong. In which, subprime debt (debt group 3) increased more than 5.5 times to 2,146 billion dongs; doubtful debt (debt group 4) also increased nearly 2.5 times to nearly 1,130 billion dongs.

At LPBank, the total bad debt also increased from more than VND3,425 billion at the end of 2022 to more than VND5,655 billion after 6 months of 2023, meaning the bad debt ratio increased from more than 1.4% of total outstanding loans to 2.2. %. However, the bad debt coverage ratio decreased, from 142% to 78%.

Notably, LPBank's volume of potentially irrecoverable debt (debt group 5) increased sharply, nearly 2 times higher than at the end of last year to nearly VND 2,440 billion.

Similarly, BacABank also recorded a bad debt increase of more than 32% to approximately VND 679 billion; subprime debt increased nearly 3.2 times after 6 months; doubtful debt increased by 52% over the same period last year. Therefore, BacABank's provision ratio for bad debt is also in the leading group, reaching 158% by the end of June 2023.

At PGBank, the volume of bad debt also increased by nearly 12.7% after 6 months, bringing the bad debt ratio at this bank to 2.77% by mid-2023.

Although the financial statements or business results have not been announced yet, at a recent State Bank conference, Mr. Nguyen Thanh Tung, General Director of Vietcombank, revealed that by the end of June 2023, the bad debt ratio of Vietcombank was at 0.85%. Although this number was at the lowest level in the system, compared to the end of 2022, there had an increase (by the end of 2022, the ratio of bad debt to total outstanding loans of Vietcombank was about 0.68%).

At Agribank, Mr. Pham Duc An, Chairman of the Board of Directors, said that the bank reduced the bad debt ratio from 8.1% to only 1.86% in the period 2016-2020. However, in recent years, this ratio had increased again when enterprises operated in moderation, production scale was shrunk, inventories were high, and revenue sources were exhausted, so it was difficult to repay bank loans. Currently, the bad debt ratio of Agribank as of June 30, 2023, increased to exactly the same time as the end of the restructuring for the 2016-2020 period, and he also said that the pressure to increase in the coming time was great.

In the report on business results in the second quarter of 2023 of SSI Securities Company, 4/11 listed banks studied by this company would reduce profits in the second quarter over the same period, including ACB, Techcombank, TPBank, and VPBank. Ho Chi Minh City Securities Company (HSC) also estimated that the average profit of the researched bank group would only increase by 12-15% in 2023. Particularly in the last 6 months of the year, HSC estimated that profit would increase by more than 20% compared to that of the second half of the year. same period.