Profit before and after tax increased although net profit from business activities before credit risk provisions decreased slightly, from VND 46,831 billion to VND 45,809 billion.
The main reason is that this bank aggressively cut credit risk provisions in the context of a sharp increase in bad debt.
Specifically, credit risk provision costs in 2023 are VND 4,565 billion, a decrease of VND 4,899 billion, equivalent to 51.8% compared to 2022. If Vietcombank does not make this cut, the year’s pre-tax profit will 2023 could be 36,346 billion VND, down 1,022 billion VND, equivalent to 2.73%.
VCB’s drastic reduction in credit risk provision costs despite increasing bad debt is a decision that is not very appropriate in the current context, if not contrary.
As of December 31, 2023, this bank’s bad debt reached 12,455 billion VND, accounting for 0.98%. Bad debt increased by 4,635 billion VND, equivalent to 59.3% compared to the end of 2022. The bad debt ratio increased from 0.68% to 0.98%.
Potentially lossable debt increased from VND 6,623 billion to VND 7,841 billion. Notably, VCB’s bad debt increased continuously in the period from 2020-2023. In 2020, bad debt is 5,230 billion VND (up 0.62%) and in 2021 it is 6,121 billion VND (up 0.64%). In 2023, it is 12,455 billion VND.
In 2023, implementing business support policies, Vietcombank will continuously reduce interest rates. During the peak period in the fourth quarter of 2023, due to interest rate reduction, net interest income decreased slightly from VND 14,809 billion to VND 12,801 billion. But for the whole year, this indicator still increased slightly from VND 53,246 billion to VND 53,621 billion.
Meanwhile, many other important activities decreased such as: net profit from service activities decreased by 1,059 billion VND, equivalent to 15.5% to 5,780 billion VND; Net profit from foreign exchange trading activities decreased slightly from VND 5,768 billion to VND 5,660 billion.
