Most banks reported strong profit growth from the foreign exchange business in the first three quarters of this year thanks to the sharp appreciation of the US dollar, Q3 2022 financial statements showed.

Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) topped the list with a profit of 4.6 trillion VND (nearly 200 million USD) from forex trading in the period, up 43% compared to the same period last year. With the high result, forex was the best growth segment in Vietcombank’s core businesses. The rise was 2.4 times the growth rate of the bank’s total operating income.

At Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank), net profit from forex business soared by more than 80% to hit a record high of 2.4 trillion VND, while the bank’s total income grew by only 20.6%.

Similarly, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) gained 2 trillion VND, up 62% over the same period last year. Forex was the fastest-growing source of the bank’s revenue in the first nine months of the year.

Preliminary statistics showed the net profit from forex trading of the above three State-owned commercial banks in the first nine months reached more than 9 trillion VND, accounting for about 60% of the total net profit of 27 listed banks. In which, Vietcombank gained nearly one-third of the total profit.

In the group of private banks, Military Joint Stock Commercial Bank (MB), Maritime Joint Stock Commercial Bank (MSB), Sai Gon Thuong Tin Joint Stock Commercial Bank (Sacombank) and HCM City Development Joint Stock Commercial Bank (HDBank) also earned large profits from forex with quite high growth rates.

Specifically, net profit from this segment of MB and Sacombank surged by around 45% over the same period last year to 1.3 trillion VND and 759 billion VND, respectively.

Meanwhile, HDBank and MSB gained nearly 200 billion VND and 889 billion VND from the forex business in the first nine months, 2.3 and 3.2 times the figures of the same period last year, respectively.

Many mid-sized private banks also fetched hundreds of billions of VND of profits from forex business, such as Vietnam Joint Stock Export Import Bank (Eximbank) with 351 billion VND (up 32.5%), Tien Phong Joint Stock Commercial Bank (TPBank) with 330 billion VND (nearly three times as much as the level of the same period last year), Southeast Asia Joint Stock Commercial Bank (SeAbank) with 144 billion VND (up 32%).

Notably, An Bình Joint Stock Commercial Bank (ABBank) recorded profit of 639 billion VND, up 38% over the same period, and was the second largest source of the bank’s revenue.

Banks gained impressive profits from forex trading in the context that the US dollar has surged rapidly since the beginning of April this year. Compared with the end of 2021, the dollar has currently risen by more than 8% against the Vietnamese dong. According to a financial expert, the higher the exchange rate is, the more profitable the banks are.

In fact, in the banks’ forex business, most of their net profits come from spot forex trading, or the gap between the buying and the selling price. For example, spot trading brought Vietcombank 85% of its revenue and all net profit in the forex business segment. Similarly, spot trading was also the main source of income in the forex business segment of VietinBank and BIDV.

Meanwhile, the gap between the buying and selling prices of the dollar listed at banks remained at more than 300 VND per dollar, much higher than the 200 VND rate in the same period in 2021. The large gap helped banks get a higher profit margin on each transaction. Besides, the trading volume of the dollar also increased against 2021.

In addition, the banks’ profits from forex trading also came from the gap between the dollar buying and selling price of commercial banks and the State Bank of Vietnam (SBV). Since April, the selling price of the dollar at commercial banks has been often much higher than that of the SBV.

In mid-July, the gap between the dollar selling price at commercial banks and the SBV’s transaction office even reached 150-200 VND per dollar. The SBV has so far sold more than 20 billion USD to commercial banks to stabilise the domestic forex market.