This is the main reason why Vietnam Public Commercial Bank (PVcomBank) recorded a sharp decline in profits in the second quarter. According to PVcomBank's explanation, the reason is that the bank has restructured its income-generating assets and portfolio, including both stocks and bonds, resulting in a significant increase in net income from securities trading. Simultaneously, additional provisions for credit risk have been made, leading to increased credit risk provision costs.

For the first six months of the year, PVcomBank achieved consolidated pre-tax profit of VND 69,675 billion, a 58% increase compared to the same period last year. This is despite a consolidated pre-tax loss of VND 239,578 billion in Q2 2024. With this result, PVcomBank ranks 27th in terms of six-month profit among the 30 commercial banks that have published their financial reports.

Thanks to a significant reduction in deposit interest expenses, PVcomBank earned over VND 1,000 billion in net profit for the first half of the year, 6.5 times higher than the same period last year, including nearly VND 763 billion in net interest income in the second quarter alone, 4.9 times higher than the same period, thus recording strong growth in its core business operations.

However, interest expenses increased by 32% to VND 8,255 billion. Revenue from service activities in the first six months of the year also decreased sharply by 36%, reaching only VND 120 billion.

In addition, the bank also increased its non-interest income sources, with net income from services reaching nearly VND 66 billion, a 2% increase compared to the same period last year, thanks to reduced costs related to payment processing, trust services, and agency operations.

Meanwhile, PVCombank's employee and administrative expenses in the first half of this year increased to VND 1,771 billion, a 13% increase compared to the same period last year.

Employee costs alone increased by 11% to over 998 billion VND as of June 30th compared to the same period last year. On average, the per-person expenditure at PVCombank in the first six months of the year was 25 million VND/person/month, including salaries, bonuses, and salary-related contributions.

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PVcomBank was the only bank to report a loss in the second quarter of 2024. Photo: Tung Doan

According to the report, PVcomBank's customer loans reached VND 103,836 billion as of June 30, 2024, an increase of 5.54% compared to the end of 2023.

Non-performing loans decreased from 4% at the end of 2023 to 3% as of June 30, 2024. However, Group 5 loans (loans with a high risk of default) increased by nearly 17% to VND 2,840 billion.

Analyzing loan balances by sector, PVcomBank prioritizes capital allocation to the real estate sector, with outstanding loans of approximately VND 30,000 billion, accounting for 28.8% of total loan balances (the proportion of real estate loans at the end of 2023 was 15.6%).

While credit growth reached only 5.54%, customer deposit mobilization at PVcomBank decreased by 1.45% compared to the end of 2023, reaching VND 175,583 billion. Of this, the CASA ratio, although increasing by 17%, only accounted for 6% of total customer deposits. This low CASA ratio puts PVcomBank at a disadvantage compared to its competitors in reducing the cost of capital.

PVcomBank is among the youngest commercial banks in Vietnam, established in 2013 through a merger between the Vietnam Petroleum Finance Corporation (PVFC) and Western Bank.

PVcomBank currently has a charter capital of VND 9,000 billion, of which the Vietnam National Petroleum Group (PVN) holds 52%. Strategic shareholder Morgan Stanley holds 7% of the bank's charter capital.

The bank has three subsidiaries: PetroVietnam Securities Joint Stock Company (PVcomBank holds 51% of the capital), PVcomBank Fund Management Joint Stock Company (99.97%), and PVcomBank Debt Management and Asset Exploitation Company Limited (100%).