Following the growth momentum and positive results of the restructuring period, in 2019, the profit target will reach at least 10 trillion dong, reflecting Vietnam Bank for Agriculture and Rural Development (Agribank)’s determination in strengthening a solid foundation before equitisation.
Affirming the leading position in the three rural fields (agriculture farmer countryside)
Mainly operating in the field of high-risk agriculture, low rate of return while taking on the role of a policy enforcement bank, Agribank still had a profit growth, exceeding the restructuring plan targets. The bank’s bad debt dropped sharply, at its lowest level ever. Service business continued to grow, drastically changing technology, improving the quality of human resources, etc. At the end of 2018, the milestone of 30 years of development, Agribank completed comprehensively to exceed 100 percent of the plan. Profit before tax reached 7.525 trillion dong, which was the record break of Agribank since its establishment. In 2016, the profit of Agribank reached 4.212 trillion dong, in 2017 reached 5.018 trillion dong.
Agribank continued to lead the system with a total asset of 1.3 quadrillion dong. Capital source reached nearly 1.2 quadrillion dong, in which residential deposits reached nearly one quadrillion dong. Credit and investment scale reached over 1.2 quadrillion dong, of which investment credit for three rural field accounted for 70.5 percent of total outstanding loans of Agribank. Capital Agribank accounted for over 50 percent credit market share of the entire banking industry for this sector.
The impressive growth of the economy in 2018 helped Agribank bring in internal bad debt to 1.51%, increase service revenue at over 21%, recover nearly 12 trillion dong of sold debts and processed risk debts, accounting for 14 percent of total outstanding loans, to significantly make the profit of Agribank in 2018. Besides, with nearly 26 trillion dong being set up for risk provision, Agribank was confident to buy all debts sold to the Vietnam Asset Management Company (VAMC) and promptly handle bad debts arising in 2019.
Together with the goal of handling bad debts, Agribank also focus on divesting investment from other sectors. From 2014 to the present, Agribank has successfully divested from seven enterprises, totalling over one trillion dong; continue to divest from the remaining businesses. For subsidiaries, besides proactively implementing bankruptcy procedures for Agribank Finance Leasing Company II (ALCII), Agribank has directed the construction and approval of restructuring plans, as well as drastically directing subsidiaries to overcome ineffective operations, and divesting at the right time.
From 2016 up to now, thanks to safe and efficient business operation, Agribank has been named in the list of 20 highest taxpayers in the country.
Agribank is currently facing some difficulties and challenges, in which one of the most difficult problems is capital raising. The charter capital of Agribank is at the lowest level compared to other big commercial banks, reached 30.47 trillion dong at the end of 2018. Because Agribank’s main investment sector is agriculture and rural loans, this bank often face with unforeseen risks of natural disasters, with large operating costs and high risks. Besides capital mobilisation that is competing equally with other commercial banks, in the credit structure, Agribank spends a large portion on priority sectors with low preferential lending rates. However, the bank is often in a state of not receiving enough interest rate compensation.
The equitisation process at Agribank is behind schedule due to the difficulties that the bank cannot solve itself. This is the commercial bank with the largest total assets, with the amount of land under the management and use of Agribank up to nearly three million m2, and diverse origin forms; the number of customers is the largest with tens of millions of customers having transactions in deposits and loans, so the receivables and payables account for the largest proportion. Therefore, the determination of Agribank’s corporate value will be complicated and take a lot of time. To solve these difficulties, Agribank is currently actively implementing solutions, closely coordinating with the Ministry of Finance, the State Bank of Vietnam and other agencies.
In 2019, Agribank also set a target to increase total assets by at least 10 percent compared to 2018, enhance financial capacity, and get ready for the equitisation roadmap under the direction of the government. If the equitisation process is successful and the difficulties are soon solved, Agribank will be more independent in operating its business, improving its competitiveness, integration, continuing to fulfill its three rural fields development mission.
