VietinBank and BIDV, two of the state-owned banks in Vietnam, experienced significant growth in their State Treasury deposit balances in the first quarter of 2023. The State Treasury had a deposit balance of 45,445 billion VND at VietinBank, and 40,000 billion VND at BIDV, both more than double the amount at the end of 2023. In contrast, Vietcombank had the lowest balance among the three banks, with over 3,300 billion VND.
The State Treasury comprises all cash at Treasury units and state funds available in Treasury accounts opened at the State Bank and commercial banks. Idle state funds are used for lending to the State budget and repaying principal before making advances to maximize benefits. These funds are deposited for a term at commercial banks through a bidding process for interest rates and term repurchase of Government bonds. By the end of 2023, nearly 7.8 million VND of idle money from the State Treasury was deposited for a term at commercial banks, earning interest of 25,100 billion VND.
In terms of business results for the first quarter, Vietcombank’s profit slightly decreased while BIDV and VietinBank saw increases. Vietcombank maintained its lead as it reported pre-tax profit over 10,700 billion VND but down slightly from the same period last year. Meanwhile, BIDV recorded an increase in pre-tax profit by nearly 7% compared to Q1 2023 with revenue from foreign exchange trading doubling while VietinBank recorded a net interest income increase of over 15 billion VND operating costs rising by only 1% and pre-tax profit up by about four percent from last year.
Overall these developments suggest that despite some fluctuations in profitability due to market conditions these state-owned banks are able to maintain their position as major players in Vietnam’s financial industry through their ability to manage idle state funds effectively while also delivering strong business results.
