Bad debt at VIB increased sharply

Vietnam International Commercial Joint Stock Bank (HoSE:VIB ) has just announced its financial report for the fourth quarter and the whole year of 2023. Accordingly, at the end of the fourth quarter of 2023, VIB recorded revenue from net interest income of VND 4,333 billion, an increase of 13.6% over the same period last year.

Non-interest income sources also brought positive results for the bank. Specifically, net profit from service activities reached 860 billion VND, up 2.5% over the same period; net profit from other activities reached 374 billion VND, up 345% over the same period.

Notably, net profit from foreign exchange trading and securities trading of VIB recorded a strong increase, reversing from negative to positive.

Accordingly, the bank's net profit from foreign exchange trading reached VND244 billion, while in the same period it lost nearly VND52 billion. Net profit from trading investment securities was recorded at VND30.5 billion, while in the same period, this segment caused VIB to lose VND97 billion.

Thanks to the growth of non-interest income, VIB's total operating income in the fourth quarter increased by 24% year-on-year to VND5,842 billion. As a result, net profit from business activities at VIB also reached nearly VND4,072 billion, up 30% year-on-year.

During the period, VIB increased operating expenses to nearly VND 1,771 billion, up 13.1% year-on-year. Notably, to strengthen its bad debt shield, VIB increased its credit risk provisioning expenses to VND 1,693 billion, nearly 4.8 times higher than the same period. As a result, VIB reported pre-tax profit in the fourth quarter of 2023 of VND 2,378 billion, down 14%; corresponding after-tax profit reached VND 1,902 billion, down 14.2% year-on-year.

In 2023, VIB recorded net interest income of VND17,361 billion, up 16% compared to 2022. Similar to the fourth quarter, the bank's non-interest income sources all brought in positive profits. As a result, the bank's total operating income increased by 23% compared to the previous year to VND22,160 billion.

At the end of 2023, VIB reported pre-tax profit of VND 10,703 billion, up slightly by 1.2%; corresponding after-tax profit reached VND 8,562 billion, up 1.1% compared to 2022. Meanwhile, the bank's credit risk provisioning expenses increased nearly 3.8 times compared to the previous year to nearly VND 4,867 billion.

In 2023, VIB plans to achieve pre-tax profit of VND12,200 billion. Thus, by the end of the year, the bank has only completed 87.7% of its profit target.

As of December 31, 2023, VIB's total assets were recorded at over VND409,880 billion, an increase of 19.5% compared to the beginning of the year. Customer loans alone were VND266,074 billion, accounting for 63.9% of total assets and an increase of 14.8% compared to the beginning of the period.

On the other side of the balance sheet, VIB's total liabilities are VND372 billion, up 20% compared to the beginning of the year. Of which, customer deposits are VND236,577 billion, up 18.2% compared to the beginning of the year.

Regarding loan quality, at the end of the year, VIB's total bad debt was VND8,374 billion, up 47% compared to the beginning of the year. Of which, substandard debt (group 3 debt) increased by 61% to VND2,479 billion, doubtful debt (group 4 debt) doubled to VND3,697 billion. This caused the bad debt/total outstanding debt ratio to increase sharply from 2.45% at the beginning of the period to 3.14% .

Source