Commercial banks made large profits from spot foreign exchange trading activities in the first half of this year as the difference between the dollar buying and selling price was often high at some VNĐ350-400 per dollar.

Statistics from Q2 2023 financial statements of 28 banks showed the total net profit from foreign exchange trading in the first half of 2023 reached nearly VNĐ12 trillion, an increase of 18 per cent over the same period last year. The rise was more than 7 times higher than the banks’ total operating income growth rate.

The Big4 group, including VietinBank, Vietcombank, BIDV and Agribank, were main earners in the business segment with nearly VNĐ8.3 trillion in net profit from foreign exchange trading in the first half of the year, an increase of 30 per cent over the same period last year, and accounting for 69 per cent of the total net profit of the entire banking industry.

Specifically, Vietcombank continued to lead the banking industry in foreign exchange trading profits when it earned more than VNĐ3.18 trillion, an increase of 6 per cent and accounting for nearly 27 per cent of the total net profit of the entire industry.

VietinBank followed with nearly VNĐ2.35 trillion, an increase of 47 per cent and accounting for nearly 20 per cent of the total net profit of the entire industry.

The value for BIDV and Agribank was nearly VNĐ1.46 trillion and VNĐ1.27 trillion, an increase of 20 per cent and 125 per cent, and accounting for 12 per cent and 10 per cent of the industry's net profit, respectively.

The superiority of the Big4 group in the foreign exchange trading segment is understandable given that this group possesses inherent strengths in the external business segment with a wide network of transactions both domestically and internationally.

The entire profit of forex trading in the Big4 group came from spot foreign currency trading, which is a stable profitable activity with the income source coming from the difference between the spot buying price and the spot selling price. Meanwhile, the selling price of the dollar in the first half of the year was often VNĐ350-400 per dollar higher than the buying price. The Big4 group therefore had a large and stable source of income from spot foreign exchange business thanks to their large transaction scale.

In addition, the banks’ profits also came from the purchase and sale activities of the dollar between the banks and the State Bank of Vietnam (SBV). In the first half of 2023, the SBV regularly maintained the dollar buying price at its exchange by VNĐ100-200 higher than the dollar buying price that commercial banks sold to their customers. With this development, commercial banks only needed to buy the greenback from customers and sold it back to the SBV to get a net profit of up to trillions of Vietnamese đồng. The SBV has so far this year bought more than US$6 billion from commercial banks. — VNS