More banks report declining profits.

The decline in key business components and the increase in provisions were the two main reasons for the rise in the number of banks experiencing profit decreases in the third quarter.

The banking sector's profit picture continues to be dominated by red. Following VPBank and BacABank, TPBank, NCB, PGBank, and LPBank are the next names to record a decrease in Q3 or 9-month profits compared to the same period last year.

In the third quarter, TPBank 's net interest income still increased by over 8%, but the impact of high capital costs is becoming apparent. Interest expenses in the last three months increased by over 47%, while interest income and related income only increased by over 27%. Other business components remained positive, with net profit from investment securities surging by nearly 80 times compared to the same period last year. This helped net profit from business operations increase by over 16%.

However, high provisioning costs increased sharply, nearly four times compared to the same period last year, causing TPBank's profits to decline. In the third quarter, the bank reported a net profit of just over 1,200 billion VND, a decrease of more than 26% compared to the third quarter of 2022. For the first nine months of the year, TPBank's net profit reached nearly 4,000 billion VND, compared to over 4,700 billion VND in the same period last year.

In contrast to TPBank, PGBank and LPBank experienced the opposite situation. While their credit risk provisioning costs decreased, the decline in their core business segments was even more pronounced.

In the third quarter, all of PGBank's business segments performed worse than the previous year. Net interest income decreased by 16%, to VND 279 billion. Non-interest income sources also declined, such as service fees (down more than 40%), foreign exchange trading (down more than 60%), and other operating income (only over VND 7 billion, compared to over VND 30 billion in the third quarter of 2022).

Despite a 26% reduction in provisions, PGBank recorded a pre-tax profit of only nearly 57 billion VND, a 60% decrease compared to the same period last year.

Similarly to LPBank, two key components – net interest income and service fees – were lower than the same period last year. Income from foreign exchange trading and other activities increased, but not enough to offset the overall decline. The bank's net profit from business operations in the third quarter reached only over VND 1,770 billion, 17% lower than the same period in 2022.

Thanks to a sharp reduction in provisions, LPBank's pre-tax profit in the third quarter was equivalent to the previous year, at nearly VND 1,000 billion. However, cumulatively for the first nine months of this year, the bank's profit decreased by more than 26%, mainly due to a decrease in net interest income.

The worst-performing bank is National Commercial Bank (NCB). In the third quarter, this bank didn't even record any income from interest – the "main source of revenue" for banks currently. Interest expenses exceeded income from interest and related items, resulting in NCB's net interest income being negative by more than 2 billion VND.

Profits from other business segments, which are not NCB's strengths, were insufficient to offset operating expenses. The bank recorded a cumulative after-tax profit of VND 47 billion in the third quarter compared to the same period last year, mainly due to net interest income of only VND 7 billion.

On the positive side, NCB's credit expansion is progressing at a faster pace. By the end of the third quarter, the bank's credit had increased by more than 8% compared to the beginning of the year.

Meanwhile, BaoVietBank is one of the few banks that experienced high business growth, but a sharp increase in credit risk provisions caused its profits to remain flat.

In the third quarter, the bank's net interest income increased by nearly 60%, and service revenue tripled compared to the same period last year. Along with other business segments, Bao Viet Bank's total operating income reached over VND 630 billion, nearly three times higher than the third quarter of the previous year.

However, the unusually high provisioning costs meant that the bank's profits were only equivalent to the previous year. In the third quarter, BaoVietBank recorded nearly 300 billion VND in credit risk provisioning costs, almost eight times higher than in the third quarter of 2022.

For the first nine months of the year, credit risk provisioning costs were the biggest highlight, increasing nearly eight times compared to the same period last year. This result caused BaoVietBank's nine-month profit to shrink to nearly 27 billion VND, a slight decrease compared to the previous year.

According to the financial statement notes, the bank has set aside over VND 520 billion in specific provisions for loans in the first nine months, and used over VND 420 billion to handle overdue debts. As of the end of the third quarter, BaoVietBank's non-performing loans (groups 3-5) amounted to over VND 1,530 billion, accounting for nearly 4% of total outstanding customer loans.

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