Photo: Duc Anh
A difficult second quarter experienced by Saigon-Hanoi Bank.
Operational costs incurred by Saigon-Hanoi Bank (SHB) increased significantly in the second quarter of the year while net profits fell, according to its first half report.
Operational costs stood at VND542 billion ($24.29 million) in the quarter, 58 per cent higher year-on-year, with net profit at VND179.84 billion ($8.06 million), down 16 per cent.
The bank incurred total costs of VND1.04 trillion ($46.62 million) in the first quarter, 25 per cent higher than the figure on December 31, 2015. Net profit increased to VND424.19 billion ($19.01 million), 11 per cent higher.
Operational costs for banking services were significantly higher in the second quarter, reaching VND29.47 billion ($1.32 million), up 23 per cent year-on-year. In the first half the figure stood at VND44.37 billion ($1.98 million), 15 per cent higher than on December 31.
Operational costs for other business activities were also up sharply. In the second quarter these costs reached VND65.74 billion ($2.94 million), 215 per cent higher year-on-year. The first half figure was VND96.23 billion ($4.31 million), up 37.92 per compared with December 31.
The bank’s bad debt ratio in the first half was not indicated in its report but it noted that VND237 billion ($10.62 million) was set aside for risk provisions, 3.5 per cent lower than on December 31.
Loans to bank customers in the first half reached VND141 trillion ($6.32 billion), 8 per cent higher than on December 31, while customer deposits totaled VND159 trillion ($7.12 billion), up 7.5 per cent.
Net interest income in the second quarter was VND769.2 billion ($34.48 million), 8.5 per cent lower year-on-year. The first half figure reached VND1.65 trillion ($73.96 million), up 14 per cent higher compared to December 31.
Foreign currency trading activities resulted in a loss of VND3.36 billion ($150,628) in the second quarter against a profit of VND10.3 billion ($461,749) in the second quarter of last year. Profit stood at VND22.74 billion ($1.01 million) in the first half, down 51 per cent compared to December 31.
The bank’s securities trading activities brought in only VND516 million ($23,132) in profit in the first half while securities investments lost VND564 million ($25,284). SHB is the major shareholder in two securities companies: the SHB Securities Joint Stock Company (SHBS) and the Saigon-Hanoi Securities Joint Stock Company (SHS). In late July it registered to divest its 4.8 per cent holding in SHS on HNX.
Total assets in the first half increased to VND212 trillion ($9.5 trillion), 4 per cent higher than on December 31.
Ratings agency Moody’s said in May that SHB was one of a few Vietnamese banks that may be exposed to risks from lending to the Hoang Anh Gia Lai Group (HAGL). SHB has the second-largest loan exposure to the Group, comprising a high 6 per cent of it tangible common equity (TCE) as at the end of March, according to Moody’s.
Furthermore, the negative impact of drought on Vietnam’s agriculture sector will also influence the performance of the bank, given its sizeable loan exposure in the sector. According to Moody’s, 20.5 per cent of SHB loans were in agriculture as at the end of 2015, one of the highest among Vietnam’s commercial banks.
- bad debt
- operation cost