Banks still gain high profits despite increased NPLs Though non-performing loans (NPLs) have increased significantly, which forced commercial banks to make higher provisions against risks, they still have reported an increase in profit in the first quarter of 2015 in comparison with the same period last year.    The NPL ratio of some commercial banks by the end of Q1 The Bank for Investment and Development of Vietnam (BIDV) is leading listed commercial banks in profit growth rate. The bank’s post-tax profit was VND1.854 trillion, an increase of 20.71 percent over the same period last year, attributed to deposit interest rate decreases and sharp cuts in other expenses, by VND640 billion. Meanwhile, the income from loan interests and other services increased slightly. Eximbank has reported satisfactory business results in the first quarter, which came after a bad fourth quarter of 2014. The bank’s post-tax profit in the first three months of the year reached VND415 billion, an increase of 20 percent over the same period last year. The reason was that the bank had to pay lower interest on bank deposits by roughly 20 percent. The same reason has also been cited as explanation for the high profits gained by the big players – VietinBank, ACB, Sacombank and MBB. Banks unanimously slashed deposit interest rates in the first months of the year. The interest rates hover around 4-5 percent for short-term deposits and 7-8 percent for long- term deposits. Of the eight listed banks, only two, Vietcombank and SHB, have reported profit decreases. The NPL ratio of seven listed commercial banks (except SHB), reached VND36.436 trillion by March 31, 2015, increasing by 20 percent compared with the beginning of the year. The banks’ NPL ratio had increased to 2.17 percent of outstanding loans from 1.86 percent earlier this year. According to the State Bank of Vietnam (SBV), the NPL ratio had reached 3.49 percent by the end of January, higher than the 3.25 percent at the end of 2014. Meanwhile, the latest report of SBV’s HCM City Branch said the NPL ratio of the local banks had increased to 5.53 percent by March 31, 2015 from 5.31 percent in late 2014. The figures all showed that NPLs have increased again after unexpectedly decreasing in late 2014. Vietcombank surprised everyone when it, considered the best bank in Vietnam, reported a NPL ratio of 2.67 percent, the highest ratio among the listed commercial banks. The bank has also reported a high provisioning rate of 94 percent against risks, the highest level among Vietnamese banks. Its high NPL ratio and high provisioning have raised controversy. Some analysts said the figures do not mean Vietcombank credit quality is worse than other banks, but show that the bank strictly follows international standards in debt classification. TBKTVN