Until now, now bank has specifically disclosed the granted credit limit, but many banks are optimistic about the business situation in 2019 when achieving positive results right from the beginning of the year.
Statistics of the Monetary Policy Department (State Bank of Vietnam) showed that the credit growth of the banking sector in the first two months of the year reached over one percent. For HCM City alone, the credit growth in the first quarter (Q1) 2019 of local banks was estimated at 1.5 percent, according to Nguyen Hoang Minh, deputy director of the SBV HCM City branch.
In fact, in the recent two to three years, HCM City has achieved positive credit growth in Q1, instead of negative growth as before. In this situation, Minh said that banks will soon run out of credit growth room because the outstanding loans often rise at the end of the year, especially in Q4. Meanwhile, since the credit growth target of the entire sector this year is only equivalent to last year with 14 percent, banks can hardly get credit room expansion.
Although the credit growth limit is strictly controlled, banks are still optimistic about 2019 business situation thanks to the positive results in Q1.
Leader of Orient Commercial Joint Stock Bank (OCB) said that the pre-tax profit target in 2019 expected to be submitted for approval at the bank’s Annual general Meeting (AGM) in late April 2019 is 3.2 trillion dong, higher than the 2.2 trillion dong attained in 2018; and the estimated result in Q1 2019 is as planned.
According to OCB’s leader, although credit revenue still accounts for a large proportion, the contribution of service sector into total revenue has improved significantly in the last two years (service sector accounted for about 15 percent of total revenue in 2018) and is constantly being promoted to increase non-credit revenues.
For Vietnam International Commercial Joint Stock Bank (VIB), the net income in Q1 2019 grew by 60-70 percent over the same period of 2018 thanks to the optimal reduction of expenses in the period, said the bank’s Chair of the Board of directors (BOD) Dang Khac Vy.
This year, VIB aims to attain 3.4 trillion dong of profit, up by 24 percent compared to the realised profit in 2018, based on the plan to expand credit by 35 percent, much higher than the overall target of the entire sector. According to Vy, regardless of the credit growth room to be granted, VIB will make every efforts to fulfil its objectives, including the accelerating service growth to increase revenue.
In fact, despite the limited credit growth room, VIB has exceeded its profit plan in the past two years with 1.405 trillion dong in 2017, up by 87 percent and 2.743 trillion dong in 2018, up by 37 percent. On the other hand, the SBV has the policy to prioritise credit growth for banks that have completed the Basel II application, including VIB. This helps VIB have more support to complete its profit plan in 2019.
“In the new term, VIB’s BOD also aims to increase basic indicators such as outstanding loans, customer deposits and profit by 20-30 percent, and maintain payment of dividend and bonus shares at 15-25 percent per annum”, shared Vy.
Representative of Saigon Commercial Joint Stock Bank (SCB) said that although the bank is in restructuring process, the proportion of service revenue in total revenue of the bank reached more than one trillion dong in 2018. SCB will hold its AGM in mid-April to approve the 2019 business targets.
The 2019 AGM season of banks is increasingly heating up when banks in turn announced their profit target of the year. Many banks have set ambitious goals of over ten trillion dong profit such as Vietnam Technological and Commercial Joint Stock Bank (Techcombank), Vietnam Prosperity Commercial Joint Stock bank (VPBank), and Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) even aims at 20 trillion dong profit in 2019. For smaller-scaled banks, the targets are also not under a few trillion dong, such as HCM Development Commercial Joint Stock Bank (HDBank) with a target of five trillion dong of pre-tax profit in 2019.
The high profit plan shows the determination of the banks’ leader board in maintaining growth momentum. However, the completion of targets depends on many factors, especially in the context when credit continues to be strictly controlled this year. To improve profits as well as gradually reduce credit dependence, according to experts, banks need to further promote service activities.
