After 6 months, the ranking of 27 Vietnamese banks using the CAMEL model analyzed by Yuanta has changed a lot. TOP 10 has 3 more new faces, and the rankings also have a significant disturbance. ACB, Vietcombank and MB continued to enter the TOP 3, but the TOP 1 position is no longer of Vietcombank.
Yuanta Securities Company has just released a report analyzing the banking industry according to the CAMEL model to give a ranking of 27 banks in Vietnam.
CAMEL analysis is a method of analyzing a bank's performance and risk. Specifically, CAMEL stands for the first letter of 5 indicators: [C]apital Adequacy, [A]sset Quality, [M]anagement, [E]arnings, [L]iquidity.
According to this ranking, ACB, Vietcombank and MB continued to reach the Top 3 on Yuanta's CAMEL ranking in the second quarter of 2022. The asset quality of these three banks remained good, with a low NPL ratio and a high LLR ratio. Notably, Vietcombank has increased its LLR ratio to a record, reaching 506% in Q2-2022, and this is also the highest level in the sector. Profits of these banks also recorded impressive growth, led by MB (raised 78% YoY), followed by ACB (raised 52%) and Vietcombank (raised 50%).
The next banks in the TOP 10 are Techcombank, MSB, TPBank, HDBank, SeABank, Sacombank, VPBank.
Ranking of 27 Vietnamese banks using the CAMEL model at the end of Q2-2022
Source: Yuanta Vietnam
Compared to the end of 2021, the ranking has many changes. Previously, at the end of Q4-2021, Vietcombank was the first bank in the ranking using Camel model analyzed by Yuanta. The TOP 10 at the end of 2021 are Vietcombank, MB, ACB, Techcombank, MSB, TPBank, Sacombank, BIDV, Vietinbank, OCB, respectively.
Thus, after 6 months, BIDV, Vietinbank, and OCB have slipped out of the TOP 10, replaced by HDBank, SeABank and VPBank.
According to the analysis team's statistics, the total profit after tax in Q2-2022 of 27 banks reached VND 51 trillion, raised 37% over the same period but dropped 7% compared to Q1-2022. The decrease in profit compared to the previous quarter was mainly due to the extraordinary non-interest income recorded in the first quarter of 2022, not due to a decrease in business activities. In fact, profit increased strongly compared to the same period last year mainly because of business improvement: non-interest income and fee income increased, while credit expense decreased.
Loan balance is an important factor for net interest income and operating profit before provisioning soon, as NIM is likely to shrink as funding costs increase.
Most of the banks have used up the original credit limit and are waiting for the State Bank (SBV) to allow the credit limit to increase. We expect the State Bank to facilitate the increase of credit limit for commercial banks by the end of Q3/2022. Yuanta said that banks like MB and Vietcombank, which have good asset quality and are engaged in weak bank restructuring activities, may receive higher credit limits than other banks.
NIM of banks is likely to decrease soon, because of the increasing capital mobilization costs and a decrease in the proportion of short-term capital used for medium and long-term loans. Liquidity showed signs of narrowing, and interbank interest rates rose sharply in the past month.
According to the analysis team, the SBV is making efforts to strengthen the value of the VND because the US Federal Reserve (FED) tightening monetary policy and the USD increasing strongly compared to the beginning of the year. These events increase banks' funding costs, so this trend is likely to continue at least until the end of the year. Meanwhile, banks will continue to support borrowers according to the policy of the State Bank to promote economic development. Therefore, lending rates may remain similar to current levels, or may only increase slightly. Therefore, the NIM of the whole industry in 2022 is likely to decrease slightly compared to the same period last year.
However, the impact will be different for each bank. Banks with low LDR (lending/depositing) ratios such as HDBank, MSB, VIB and VPBank will be less pressured to raise capital costs than banks with high LDR ratios.
In addition, banks with a high CASA ratio, such as Techcombank, MB, and Vietcombank, can limit the negative effects on NIM when the cost of capital increases.
The reduction in the ratio of short-term funds used for medium and long-term loans will also affect the NIM ratio of banks. The SBV is expected to reduce the ratio of short-term funds used for medium and long-term loans from 37% to 34% by October 2022. Therefore, banks with this ratio at a high level will have to reduce it, or they may not have much room to increase this ratio and improve NIM. Banks with a low ratio of short-term capital used for medium and long-term loans (such as ACB, HDBank, MSB and VPBank) still have room to lend and increase NIM.
(Nhip song Kinh te)