Many banks gain big profits from foreign exchange trading

View of a Techcombank’s transaction office in Hà Nội. In the second quarter of 2024, Techcombank gained a net profit of more than VNĐ411 billion from foreign exchange trading activities. Photo bnews.vn

HÀ NỘI — The appreciation of the US dollar against the Vietnamese đồng in the first half of this year brought large non-interest income to many commercial banks.

Some banks even recorded strong growth of three digits or switched from loss to a large profit in the foreign exchange business segment.

BIDV this week announced its consolidated financial report for the mid-year with a post-tax profit of VNĐ6.53 trillion, up 17.7 per cent over the same period last year, thanks to a sharp increase in non-interest income sources.

Notably, foreign exchange trading activities brought BIDV a net profit of up to nearly VNĐ1.73 trillion in the second quarter of 2024, up 120 per cent over the same period in 2023. This was also BIDV's second largest non-interest income, after the service segment reaching nearly VNĐ1.94 trillion.

Accumulated in the first half of this year, foreign exchange trading brought in a huge net profit of VNĐ3.19 trillion for BIDV, more than double that of the same period last year.

The mid-year financial report of LPBank also showed a large contribution from the foreign exchange trading segment to the bank's profit growth. Specifically, in the second quarter of 2024, LPBank recorded a post-tax profit of VNĐ2.42 trillion, 3.4 times higher than the same period last year. This was also the strongest increase of this bank in recent quarters.

In addition to the growth in net interest income thanks to the economic recovery, LPBbank also recorded a sharp increase in non-interest income compared to the same period last year, of which profit from foreign exchange trading was 2.3 times higher than the same period.

Hồ Nam Tiến, General Director of LPBank, said export orders of manufacturing enterprises have improved, which has helped an increase in the demand for foreign currency capital. In addition, LPBank has actively accompanied in providing foreign exchange services to meet the business requirements of enterprises, leading to an increase in income from foreign exchange trading activities.

At Techcombank, Phùng Quang Hưng, the bank's Deputy General Director, said Techcombank also recorded large profits from foreign exchange trading activities.

Techcombank's financial report shows that in the second quarter of 2024, Techcombank gained a net profit of more than VNĐ411 billion from foreign exchange trading activities, while in the same period last year it lost VNĐ11 billion. In the first half of 2024, this service segment brought Techcombank over VNĐ955 billion, a huge increase compared to the loss of more than VNĐ240 billion in the same period in 2023.

The business results of SeABank in the second quarter of 2024 also recorded a strong recovery in the foreign exchange trading segment. Specifically, foreign exchange trading activities brought SeABank a profit of nearly VNĐ304 billion, a sharp increase compared to VNĐ33 billion in the same period last year.

At ACB, net profit from foreign exchange trading also increased by more than 30 per cent in the second quarter of 2024 compared to the same period in 2023.

In the first half of this year, the US Federal Reserve (Fed) kept interest rates higher longer than market expectations, along with the divergence in monetary policy management of many central banks, which caused many countries' currencies to depreciate, including the đồng. According to data from the State Bank of Vietnam, in the first six months of 2024, the depreciation of the đồng against the dollar was about 4.4 per cent.

Meanwhile, the income from foreign exchange of banks mainly came from spot foreign exchange trading services. It meant the banks’ income was from the gap between the buying and selling prices, besides income from currency derivative financial instruments.

Therefore, experts said with strong fluctuations in exchange rates in the first half of this year, it is understandable that many banks, especially large banks, recorded large profits from foreign exchange trading.