Surge in Risk Provisions, HDBank Still Grew Pre-Tax Profit by 47% in Q1

In the first quarter, credit revenue remained the major contributor to HDBank’s income, surging 48% year-on-year to VND7,610 billion (US$328.7 million) in net interest income.

However, non-interest revenue did not witness uniform growth. Service fee revenue declined by 47% year-on-year to merely VND357 billion ($15.5 million), while trading securities business recorded a loss of nearly VND79 billion ($3.4 million), compared to a gain of nearly VND28 billion ($1.2 million) in the same period last year.

On the flip side, foreign exchange trading activities reaped a profit of nearly VND175 billion ($7.6 million), while the same period last year incurred a loss. Profit from investment securities trading also grew 2.7 times to VND65 billion ($2.8 million).

During the quarter, HDBank increased its operating expenses by 25% to VND2,455 billion ($106.3 million) due to higher personnel and administrative expenses.

Provisions for credit risk also increased by 33% as HDBank set aside VND1,270 billion ($55 million). Nevertheless, the bank still reported pre-tax profit of nearly VND4,028 billion ($174.6 million), up 47% year-on-year.

As such, HDBank has fulfilled 25% of its pre-tax profit target of VND15,852 billion ($688.4 million) for the whole of 2024 after the first quarter.

As of the end of the first quarter, HDBank’s total assets remained flat compared to the beginning of the year at VND602,552 billion ($26,143.4 million). Of which, deposits at the State Bank of Vietnam saw a sharp 46% decrease (to VND22,525 billion, or $975.5 million), while deposits at other commercial banks also fell by 10% (to VND79,329 billion, or $3,435.8 million). Loans to customers increased by 6% to VND363,449 billion ($15,763.4 million), mainly to individual customers and household businesses.

On the liabilities side, deposits from other commercial banks decreased by 11% (to VND55,849 billion, or $2,419.3 million), while borrowings from other commercial banks increased by 3% (to VND51,159 billion, or $2,221.8 million). Customer deposits grew by only 2% to VND378,789 billion ($16,418.4 million). Issuance of valuable papers declined by 10% to VND46,301 billion ($2,004.2 million).

HDBank’s total bad debt as of March 31, 2024, was recorded at VND8,062 billion ($350.6 million), up 31% compared to the beginning of the year. The bad debt ratio to outstanding loans increased from 1.79% at the beginning of the year to 2.22%.

Han Dong