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

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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 show that at different times, the outstanding 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

CTG 2004 2005 2006 2007 2008 2009 2010 2011 2012 two thousand and thirteen 2014
Commerce 13,876.228 23,869,089 28,369,731 21,594,964 22,632,090 34,429,682 27,138,852 34,466.215 97,095,238 107,208,518 126,330,108
Agriculture and Forestry 5,662.755 6,568,796 4,067,697 4,284.351 3,885,097 5,309,319 3,998,167 9,112,689 8,301,832 11,284,962 14,810,445
Production and processing
processing
21,270,873 25,932,993 23,009,259 36,766,934 46,853,971 62,422,856 89,689,763 130,685,351 153,421,113 178,220,363 197,791,582
Construct 8,944.213 10,375,287 10,729,148 10,851,994 13,565,930 17,885,395 26,761,802 31,847,519 22,774.338 26,714,044 37,885,479
Personal and community service 0 0 0 11,451,945 12,771,385 11,124,520 57,544,064 45,376,493 5,163,221 7,537.839 13,114,180
Warehousing, transportation
and communication
7,008,457 4,313,849 4,723.005 8,371,873 11,460,130 15,280,939 17,249,959 17,178,465 1,755,920 1,531,201 8,776,153
Education and training 0 0 0 367.208 304,884 402.623 972,029 80,208 968,304 786,232 707.717
Consulting and real estate business
estate
0 0 0 164,019 363.331 1,142,348 3,351,458 9,076,515 26,068,597 24,801,326 27,200,777
Restaurants and hotels 0 0 0 2,571,687 2,883,230 4,320,722 4,846,514 3,168,270 2,291,814 2,415,838 3,231,545
Financial services 0 0 0 607,434 409,820 641.464 1,549,524 422,625 479 34.353 69.581
Other professions 7,396,996 3,572,257 9,253,494 5,158,231 5.622,134 6.553.422 1,201,677 10,640,606 5,734.657 7,671,503 9,951,460
total 64,159,522 74,632,271 80,152,334 102,190,640 120,752.073 163,170,485 234,204,809 293,434,312 333,356,092 376,288,968 439,869,027
VCSH 4,908,773 4,999,839 5,637,625 10,646,529 12,336.159 12,572,078 18,170,363 28,490,896 33,624,531 54,074.666 55,012,808
Industry ratio (3)/Equity 4.33 5.19 4.08 3.45 3.80 4.97 4.94 4.59 4.56 3.30 3.60
VCB 2004 2005 2006 2007 2008 2009 2010 2011 2012 two thousand and thirteen 2014
Commerce 27,866,687 16,201,654 17,484,141 18,560,451 24,990,989 35,928,224 38,862,585 46,445,516 53,528,805 80,800,074 94,640,746
Agriculture and Forestry 5,432,318 2,615,889 1,979,700 won 3,614,146 2,414.403 1,944,886 2,071,144 2,445,791 4,765.988 6,172,905 7,629,908

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

Production and
processing
11,647,332 23,618,936 27,311,528 51,952,889 57,742,660 71,525,045 89,235,796 106,949.548 120,341,779 129,107,675 149,102,895
Construct 2,140,626 3,474.629 3,982,156 6,351,442 7,552,473 11,144,304 10,479,503 12,840,564 14,083,060 15,392,873 16,391,604
Personal and community
service
0 0 0 0 0 0 0 0 0 0 0
Warehousing, transportation
and communication
620,820 2,019,377 2,874,388 5,923,301 7,434,487 10,416,625 12,167,693 11,803.491 12,396,866 10,217.873 15,175,476
Education and training 0 0 0 0 0 0 0 0 0 0 0
Real
estate consulting and business
0 0 0 0 0 0 0 0 0 0 0
Restaurants and hotels 605,135 1,429,339 1,680,267 3,305,780 2,843,598 30,425.668 3,960,130 5,433,282 6,025,950 7,139,014 8,806,821
Financial services 0 0 0 0 0 0 0 0 0 0 0
Other professions 5,291,629 11,684,157 12,430,339 7,823,885 9,814.355 7,619,474 20,028,055 23,499,441 30,024.860 25,483,795 31,584,587
total 53,604,547 61,043,981 67,742,519 97,531,894 112,792,965 141,621,126 176,813,906 209,417,633 241,167,308 274,314,209 323,332,037
VCSH 7,180,787 8,416.426 11,127.248 13,551,546 13,790,042 16,710,333 20,736,729 28,638,696 41,546,850 42,386,065 43,350,720
Industry ratio (3)/Equity 1.62 2.81 2.45 3.83 4.19 4.28 4.30 3.73 2.90 3.05 3.44
BIDV 2004 2005 2006 2007 2008 2009 2010 2011 2012 two thousand and thirteen 2014
Commerce 0 0 8,893,619 16,362,024 24,007,860 32,854,989 39,778,455 58,977,336 67,883,744 88,416.206 103,096,421
Agriculture and Forestry 0 0 4,679,912 5,290,690 6,691.076 6,888,840 9,006,414 11,781,038 18,141,674 19,116,439 24,248,933
Production and
processing
0 0 39,600,763 42,221,736 54,245,458 68,477,021 75,583.854 112,185,506 126,851,956 131,031.196 130,591,895
Construct 0 0 24,557.525 31,148,143 37,176,109 47,849,795 68,383,952 42,612,567 42,861,234 56,268,105 70,567,421
Personal and community
service
0 0 10,072,222 15,578,430 15,505,003 16,425,059 27,778,223 32,252,942 0 0 0
Warehousing, transportation
and communication
0 0 3,664,188 5,996,619 9,263,644 14,527,938 15.675,009 16,828,851 13,545,599 11,280,689 10,382,326
Education and training 0 0 200,348 204,504 209,989 329,412 494.664 652,463 275,201 224.626 224,025
Real
estate consulting and business
0 0 1.891 885 0 0 0 1.621,136 23,387,246 27,887,821 31,623,292
Restaurants and hotels 0 0 3,929,218 5,482,946 8,767.875 9,682.714 6,352,833 2,377,462 10,172,872 11,947,166 13,210,517
Financial services 0 0 1,469,141 7,557,370 1,897,561 4,014,066 3,311,183 1,669,409 720,589 698,093 1,713,638
Other professions 0 0 1,570,011 2,140,207 3,217,945 5,352.074 7,462,988 14,599,546 36,083,553 44,164,110 60,034,546
total 0 0 98,638,838 131,983.554 160,982,520 206,401,908 254,191,575 293,937,120 339,923,668 391,035,051 445.693,014
VCSH 6,182,140 6.530,861 7,626.198 11,634.793 13,466,100 17,639,330 24,219,730 24,390,455 26,494,446 32,039,983 33,271,267
Industry/equity ratio     5.19 3.63 4.03 3.88 3.12 4.60 4.79 4.09 3.93
SCB 2004 2005 2006 2007 2008 2009 2010 2011 2012 two thousand and thirteen 2014
Commerce 0 0 124,591 737,572 794,957 735,826 795,036 0 2,542,875 1,591,130 2,451.043
Agriculture and Forestry 0 0 22,882 504,999 won 218,180 89,480 40,888 0 189,793 314.684 1,548,203
Production and
processing
0 0 484.967 1,464,396 1,794,424 2,757,679 2,697,116 0 1,802,204 1,014,588 392,463
Construct 0 0 765,967 2,231,504 2,814,177 3.144,053 5,506,210 0 4,533,570 5,258,800 965,568
Personal and community
service
0 0 5,917,915 12,793,188 14,976,382 18,645,836 17,450,574 0 7,138,809 10,783,792 45,536,659
Warehousing, transportation
and communication
0 0 168.861 128,651 490,681 2,637.828 495,471 0 290,317 39,408 165,111
Education and training 0 0 7,941 78.255 328,958 633.448 659,477 0 536.664 253,596 252
Real
estate consulting and business
0 0 162,587 278.701 665.136 907,185 3.802.235 0 8,264,988 8,878.459 10,799,954
Restaurants and hotels 0 0 348,174 276.116 301,554 963,950 1,010,934 0 481.605 473.731 7,143
Financial services 0 0   151,007 237.520 318,038 706.219 0 636,000 won 636,000 won 0
Other professions 0 0 14,077 833.216 656.287 477.166 13.493 0 61,738,075 59,759,511 72,159,045
total 0 0 8,017,962 19,477,605 23.278,256 31,310,489 33,177,653 0 88,154,900 89,003,699 134,025,441
VCSH 169,178 330,419 819,925 2,671,744 2,809,167 4.583,816 4,710,636 11,334,503 11,370,065 13,112,557 13,185,291
Sector ratio (5)/Equity     7.22 4.79 5.33 4.07 3.70 0.00 0.63 0.82 3.45
ACB 2004 2005 2006 2007 2008 2009 2010 2011 2012 two thousand and thirteen 2014
Commerce 1,162,612 1,990,939 5,124,972 8,012,741 8,175,846 19,831.560 27,586,762 36,550,927 33,197,034 27,095,125 28,220,351
Agriculture and Forestry 145,220 129.252 136.125 116.274 221,790 166,870 249,095 331.074 518,140 1,037,612 937,475
Production and
processing
1,989,665 2,119,473 3,848,511 5,428,273 4,514,346 11,266,591 13,202,929 14,738,551 13,270,504 20,896,900 21,186,829
Construct 200,805 318,852 429,966 722,166 946,652 2,373,316 3,534,433 4,827,444 3,343,992 3,806,157 4,279,018
Personal and community
service
2,789,251 3,621,374 6,621,287 14,984,250 17,709,042 22,939,329 33,408,347 35,275,324 43,692,871 45,312,225 0
Warehousing, transportation
and communication
118,461 269,963 377,576 763,208 739,817 1,756,208 2,600,582 3,016,162 2,386,365 3,150,961 2,791,264
Education and training 2.088 30,968 45,274 58.545 2.595 31.255 80,160 105,762 101.094 116.841 146.458
Real
estate consulting and business
199,823 190,719 150,213 360,108 608,307 519,614 1,276,296 1,449,056 1,079,051 2,205,845 2,265,001
Restaurants and hotels 44.433 68,568 175,542 354,585 493,586 997.745 1,474,081 2,174,478 1,816,546 1,707,964 1,934.505
Financial services 503 5.135 80,836 5,620 4,300 630,766 667,142 703.228 631,529 100 246,055
Other professions 45,576 636,274 24,117 1,005,087 1,416,419 1,844,724 2,568.137 2,725.627 2,777,722 1,860,291 2,046,320
total 6,698,437 9,381,517 17,014,419 31,810,857 34.832,700 62,357,978 86,647,964 101,897,633 102,814,848 107,190,021 64,053,276
VCSH 705.684 1,283,206 1,653,987 6,257,849 7,766,468 10,106,287 11,376,757 11,959,092 12,397,303 12,504,202 12,624.452
Sector ratio (5)/Equity 3.95 2.82 4.00 2.39 2.28 2.27 2.94 2.95 3.52 3.62 0.00

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: %

Year 2010 2011 2012 two thousand and thirteen 2014
ABB 0.00% 1.60% 2.21% 2.76% 1.82%
BAOVIET 0.60% 1.18% 2.04% 1.25% 0.00%
BIDV 0.00% 1.99% 1.74% 1.57% 1.49%
CTG 0.00% 1.03% 1.10% 0.88% 0.99%
ACB 0.00% 0.96% 1.46% 1.44% 1.36%
EAST 0.00% 1.03% 1.10% 0.88% 0.99%
EIB 0.00% 0.83% 0.81% 0.85% 1.17%
HDBank 0.00% 1.02% 0.92% 1.58% 1.15%
KIENLONG 0.00% 1.13% 1.47% 1.03% 1.01%
LIENVIET 0.00% 0.92% 1.75% 2.01% 1.15%
MDB 0.00% 1.17% 1.84% 1.03% 1.54%
MBB 0.00% 1.85% 1.76% 2.02% 2.45%
MHB 0.00% 1.24% 1.80% 1.16% 0.85%
MSB 0.00% 0.97% 2.59% 2.68% 2.31%
NAMAs 0.00% 0.76% 1.02% 0.66% 0.93%
OCB 0.00% 1.26% 1.81% 1.02% 1.42%
OCEAN 0.00% 1.04% 1.21% 2.57% 2.54%
PGBANK 0.00% 1.52% 2.31% 1.35% 1.19%
PNB 0.90% 1.36% 2.08% 2.68% 0.00%
SAIGONBANK 0.00% 2.12% 1.01% 0.95% 0.83%
SCB 0.00% 2.50% 1.12% 0.73% 0.54%
SHB 0.00% 1.22% 2.20% 1.55% 1.01%
STB 0.00% 1.01% 1.50% 1.22% 1.07%
TEACHCOMBANK 0.00% 1.40% 1.65% 1.69% 1.20%
VCB 0.00% 2.54% 2.19% 2.35% 2.34%
VIETNAM 0.00% 1.64% 1.53% 1.34% 1.19%
VIETCAPITAL 0.00% 1.07% 0.94% 1.24% 1.08%
VPBank 0.00% 1.08% 1.03% 1.15% 1.43%

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