Research on the impact of loan portfolios on profitability of joint stock commercial banks - 7

In addition, according to the Basel committee, when comparing the outstanding balance of an industry with the equity level of a bank at the same time, it will also assess the concentration of risk of the portfolio. The data on the annual reports of joint stock commercial banks show that at different times, the outstanding loans of a certain industry can exceed the equity level at the same time many times. Typically, in 2006, ACB's lending to the community for personal services was 4 times higher than equity, while Vietinbank's lending to processing industry was 5 times higher than equity in 2009, Vietcombank's production and processing activities were faster. 4 times equity.That is a manifestation of very large portfolio risk because as we know that the proportion of loans usually accounts for a very high proportion of the total assets of these banks and at the same time, credit interest income accounts for the total operating profit. also accounted for a very large proportion.

Below is a table showing the ratio of outstanding loans of some industries to equity representing the very large portfolio risk of some large banks.

Table 3.8: Proportion of outstanding loans of an industry to equity

Unit: Million VND

CTG200420052006200720082009201020112012two thousand and thirteen2014
Commerce13,876.22823,869,08928,369,73121,594,96422,632,09034,429,68227,138,85234,466.21597,095,238107,208,518126,330,108
Agriculture and Forestry5,662.7556,568,7964,067,6974,284.3513,885,0975,309,3193,998,1679,112,6898,301,83211,284,96214,810,445
Production and processing
processing
21,270,87325,932,99323,009,25936,766,93446,853,97162,422,85689,689,763130,685,351153,421,113178,220,363197,791,582
Construct8,944.21310,375,28710,729,14810,851,99413,565,93017,885,39526,761,80231,847,51922,774.33826,714,04437,885,479
Personal and community service00011,451,94512,771,38511,124,52057,544,06445,376,4935,163,2217,537.83913,114,180
Warehousing, transportation
and communication
7,008,4574,313,8494,723.0058,371,87311,460,13015,280,93917,249,95917,178,4651,755,9201,531,2018,776,153
Education and training000367.208304,884402.623972,02980,208968,304786,232707.717
Consulting and real estate business
estate
000164,019363.3311,142,3483,351,4589,076,51526,068,59724,801,32627,200,777
Restaurants and hotels0002,571,6872,883,2304,320,7224,846,5143,168,2702,291,8142,415,8383,231,545
Financial services000607,434409,820641.4641,549,524422,62547934.35369.581
Other professions7,396,9963,572,2579,253,4945,158,2315.622,1346.553.4221,201,67710,640,6065,734.6577,671,5039,951,460
total64,159,52274,632,27180,152,334102,190,640120,752.073163,170,485234,204,809293,434,312333,356,092376,288,968439,869,027
VCSH4,908,7734,999,8395,637,62510,646,52912,336.15912,572,07818,170,36328,490,89633,624,53154,074.66655,012,808
Industry ratio (3)/Equity4.335.194.083.453.804.974.944.594.563.303.60
VCB200420052006200720082009201020112012two thousand and thirteen2014
Commerce27,866,68716,201,65417,484,14118,560,45124,990,98935,928,22438,862,58546,445,51653,528,80580,800,07494,640,746
Agriculture and Forestry5,432,3182,615,8891,979,700 won3,614,1462,414.4031,944,8862,071,1442,445,7914,765.9886,172,9057,629,908

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Research on the impact of loan portfolios on profitability of joint stock commercial banks - 7

Production and
processing
11,647,33223,618,93627,311,52851,952,88957,742,66071,525,04589,235,796106,949.548120,341,779129,107,675149,102,895
Construct2,140,6263,474.6293,982,1566,351,4427,552,47311,144,30410,479,50312,840,56414,083,06015,392,87316,391,604
Personal and community
service
00000000000
Warehousing, transportation
and communication
620,8202,019,3772,874,3885,923,3017,434,48710,416,62512,167,69311,803.49112,396,86610,217.87315,175,476
Education and training00000000000
Real
estate consulting and business
00000000000
Restaurants and hotels605,1351,429,3391,680,2673,305,7802,843,59830,425.6683,960,1305,433,2826,025,9507,139,0148,806,821
Financial services00000000000
Other professions5,291,62911,684,15712,430,3397,823,8859,814.3557,619,47420,028,05523,499,44130,024.86025,483,79531,584,587
total53,604,54761,043,98167,742,51997,531,894112,792,965141,621,126176,813,906209,417,633241,167,308274,314,209323,332,037
VCSH7,180,7878,416.42611,127.24813,551,54613,790,04216,710,33320,736,72928,638,69641,546,85042,386,06543,350,720
Industry ratio (3)/Equity1.622.812.453.834.194.284.303.732.903.053.44
BIDV200420052006200720082009201020112012two thousand and thirteen2014
Commerce008,893,61916,362,02424,007,86032,854,98939,778,45558,977,33667,883,74488,416.206103,096,421
Agriculture and Forestry004,679,9125,290,6906,691.0766,888,8409,006,41411,781,03818,141,67419,116,43924,248,933
Production and
processing
0039,600,76342,221,73654,245,45868,477,02175,583.854112,185,506126,851,956131,031.196130,591,895
Construct0024,557.52531,148,14337,176,10947,849,79568,383,95242,612,56742,861,23456,268,10570,567,421
Personal and community
service
0010,072,22215,578,43015,505,00316,425,05927,778,22332,252,942000
Warehousing, transportation
and communication
003,664,1885,996,6199,263,64414,527,93815.675,00916,828,85113,545,59911,280,68910,382,326
Education and training00200,348204,504209,989329,412494.664652,463275,201224.626224,025
Real
estate consulting and business
001.8918850001.621,13623,387,24627,887,82131,623,292
Restaurants and hotels003,929,2185,482,9468,767.8759,682.7146,352,8332,377,46210,172,87211,947,16613,210,517
Financial services001,469,1417,557,3701,897,5614,014,0663,311,1831,669,409720,589698,0931,713,638
Other professions001,570,0112,140,2073,217,9455,352.0747,462,98814,599,54636,083,55344,164,11060,034,546
total0098,638,838131,983.554160,982,520206,401,908254,191,575293,937,120339,923,668391,035,051445.693,014
VCSH6,182,1406.530,8617,626.19811,634.79313,466,10017,639,33024,219,73024,390,45526,494,44632,039,98333,271,267
Industry/equity ratio  5.193.634.033.883.124.604.794.093.93
SCB200420052006200720082009201020112012two thousand and thirteen2014
Commerce00124,591737,572794,957735,826795,03602,542,8751,591,1302,451.043
Agriculture and Forestry0022,882504,999 won218,18089,48040,8880189,793314.6841,548,203
Production and
processing
00484.9671,464,3961,794,4242,757,6792,697,11601,802,2041,014,588392,463
Construct00765,9672,231,5042,814,1773.144,0535,506,21004,533,5705,258,800965,568
Personal and community
service
005,917,91512,793,18814,976,38218,645,83617,450,57407,138,80910,783,79245,536,659
Warehousing, transportation
and communication
00168.861128,651490,6812,637.828495,4710290,31739,408165,111
Education and training007,94178.255328,958633.448659,4770536.664253,596252
Real
estate consulting and business
00162,587278.701665.136907,1853.802.23508,264,9888,878.45910,799,954
Restaurants and hotels00348,174276.116301,554963,9501,010,9340481.605473.7317,143
Financial services00 151,007237.520318,038706.2190636,000 won636,000 won0
Other professions0014,077833.216656.287477.16613.493061,738,07559,759,51172,159,045
total008,017,96219,477,60523.278,25631,310,48933,177,653088,154,90089,003,699134,025,441
VCSH169,178330,419819,9252,671,7442,809,1674.583,8164,710,63611,334,50311,370,06513,112,55713,185,291
Sector ratio (5)/Equity  7.224.795.334.073.700.000.630.823.45
ACB200420052006200720082009201020112012two thousand and thirteen2014
Commerce1,162,6121,990,9395,124,9728,012,7418,175,84619,831.56027,586,76236,550,92733,197,03427,095,12528,220,351
Agriculture and Forestry145,220129.252136.125116.274221,790166,870249,095331.074518,1401,037,612937,475
Production and
processing
1,989,6652,119,4733,848,5115,428,2734,514,34611,266,59113,202,92914,738,55113,270,50420,896,90021,186,829
Construct200,805318,852429,966722,166946,6522,373,3163,534,4334,827,4443,343,9923,806,1574,279,018
Personal and community
service
2,789,2513,621,3746,621,28714,984,25017,709,04222,939,32933,408,34735,275,32443,692,87145,312,2250
Warehousing, transportation
and communication
118,461269,963377,576763,208739,8171,756,2082,600,5823,016,1622,386,3653,150,9612,791,264
Education and training2.08830,96845,27458.5452.59531.25580,160105,762101.094116.841146.458
Real
estate consulting and business
199,823190,719150,213360,108608,307519,6141,276,2961,449,0561,079,0512,205,8452,265,001
Restaurants and hotels44.43368,568175,542354,585493,586997.7451,474,0812,174,4781,816,5461,707,9641,934.505
Financial services5035.13580,8365,6204,300630,766667,142703.228631,529100246,055
Other professions45,576636,27424,1171,005,0871,416,4191,844,7242,568.1372,725.6272,777,7221,860,2912,046,320
total6,698,4379,381,51717,014,41931,810,85734.832,70062,357,97886,647,964101,897,633102,814,848107,190,02164,053,276
VCSH705.6841,283,2061,653,9876,257,8497,766,46810,106,28711,376,75711,959,09212,397,30312,504,20212,624.452
Sector ratio (5)/Equity3.952.824.002.392.282.272.942.953.523.620.00

Besides, we need to consider the operating costs of the bank to better assess the profit that the bank achieves. A typical expense of the banking industry is the provision for bad debts in the period shown on the income statement. This is one of the non-cash expenses, showing the bank's subjective assessment of lending activities, directly affecting the bank's profit statement in the period. The increased recognition of provision expense for bad debts shows that the bank lent too much in the previous accounting periods, did not carefully assess the loan quality and repayment ability of the customer, increasing the possibility of loss. bank's capital and forced to increase provision for bad debt.

In the case of Vietcombank, the forecasted growth for bad debt in each reporting period (year) of the period 2008-2013 is approximately 12%, lower than the average rate of other banks like MBB. (54%), ACB (40%), STB (42%)… Banks have started to increase provision for bad debts in recent years, depending on which bank is sooner or later in recognition and regularly recorded or not during this period. However, due to the overall effect of sluggish growth in the economy, loans are more likely to be classified as bad debt, and if so, forcing banks to make more provision for bad debts. Therefore, banks that make low provision for bad debts may have to increase their provision for bad debts more and more in the coming time,and profit reporting figures may therefore be affected and not be as “pink” in the coming years as those reported in previous years. The ability to lose capital of banks is likely to have happened, not until banks make adequate provisions for bad debts, the capital will be lost.

Provisions for bad debts during the period still go into the (accumulative) provision for bad debts on the balance sheet (Loan loss reserves, also known as Allowance for bad debts).

Table 3.9: Ratio of provision for bad debts to total outstanding loans in some banks

Unit: %

Year201020112012two thousand and thirteen2014
ABB0.00%1.60%2.21%2.76%1.82%
BAOVIET0.60%1.18%2.04%1.25%0.00%
BIDV0.00%1.99%1.74%1.57%1.49%
CTG0.00%1.03%1.10%0.88%0.99%
ACB0.00%0.96%1.46%1.44%1.36%
EAST0.00%1.03%1.10%0.88%0.99%
EIB0.00%0.83%0.81%0.85%1.17%
HDBank0.00%1.02%0.92%1.58%1.15%
KIENLONG0.00%1.13%1.47%1.03%1.01%
LIENVIET0.00%0.92%1.75%2.01%1.15%
MDB0.00%1.17%1.84%1.03%1.54%
MBB0.00%1.85%1.76%2.02%2.45%
MHB0.00%1.24%1.80%1.16%0.85%
MSB0.00%0.97%2.59%2.68%2.31%
NAMAs0.00%0.76%1.02%0.66%0.93%
OCB0.00%1.26%1.81%1.02%1.42%
OCEAN0.00%1.04%1.21%2.57%2.54%
PGBANK0.00%1.52%2.31%1.35%1.19%
PNB0.90%1.36%2.08%2.68%0.00%
SAIGONBANK0.00%2.12%1.01%0.95%0.83%
SCB0.00%2.50%1.12%0.73%0.54%
SHB0.00%1.22%2.20%1.55%1.01%
STB0.00%1.01%1.50%1.22%1.07%
TEACHCOMBANK0.00%1.40%1.65%1.69%1.20%
VCB0.00%2.54%2.19%2.35%2.34%
VIETNAM0.00%1.64%1.53%1.34%1.19%
VIETCAPITAL0.00%1.07%0.94%1.24%1.08%
VPBank0.00%1.08%1.03%1.15%1.43%
Date published: 10/11/2021
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