The delay of the annual general Meeting of Shareholders had created time for many banks to consider submitting completely new business plans to shareholders.
Kien Long Commercial Joint Stock Bank (Kienlongbank) was the rare bank to hold a general meeting of shareholders on March 27 before the directive of social isolation of the government. Perhaps so, the bank’s business plan was still quite bright. In 2020, Kienlongbank aimed to achieve a profit before tax of 750 billion dong, an increase of nearly nine times compared to 2019 and 2.6 times higher than in 2018. Total assets were expected to increase by 12.72 percent to 57.6 trillion dong. Credit balance rose by 15.89 percent to 38.8 trillion dong, capital mobilisation also grew by 13.14 percent to 52.5 trillion dong.
Kienlongbank’s leaders said that this profit plan was built based on the condition that the Covid-19 epidemic was best controlled. In fact, if the pandemic took a longer time, adversely affecting business activities, the Board of directors of the Bank would report to the meeting to adjust accordingly.
According to banks’ leaders, this year, no bank could build a business scenario due to the unpredictable movement. Even when banks had set the script in many steps, the best and the worst, those would not be correct. A flexible plan that allowed adjustments was more reasonable.
Bad debt was a challenging problem which leaders of any bank had to face. According to the international credit institution Moody’s, the risks to asset quality might arise due to the outbreak of the Covid-19 epidemic.
Long-term epidemics would lead to an increase in non-performing loans from manufacturing, trading, and businesses that had strong relationships with global supply chains.
To support businesses, as well as to support themselves, banks were forced to reduce interest rates for companies that were borrowing, restructuring debt. Banks had to accept short-term profit reduction.
The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)’s leaders said that the Bank must sacrifice at least 300 billion dong to 450 billion dong in profits to reduce interest rates for customers affected by the epidemic. Besides, businesses having difficulty in cash flow might change the bad debt ratio as well as the risk provisioning level.
Currently, most banks that had not yet held a general Meeting of Shareholders proposed business plans. However, most of the expectations were still in the bright scenario, preparing when the Covid-19 epidemic had not yet spread.
For example, Asia Commercial Joint Stock Bank (ACB) expected to reach 8.7 trillion dong of profit before tax in 2020 compared to the profit of 7.515 trillion dong last year. Still, this bank also had to cancel the meeting scheduled held on April 7, and had not yet submitted to shareholders for approval on the above plan. However, before the current market situation, ACB would consider adjusting.
Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) held a meeting and approved the shareholders’ business plan with a profit target in 2020 at 12.5 trillion dong, an increase of 15 percent compared to 2019. The bad debt ratio was expected to be less than 1.6%. However, according to BIDV’s leaders, if calculating the total balance of the potentially affected industries such as tourism, export, agriculture, it would be worth about 140 trillion dong. Therefore, the profit target set at the beginning of the year in the scenario of the disease ending in March 2020 became difficult and would be adjusted in the compelling case.
Some banks, such as Vietnam Technological and Commercial Joint-Stock Bank (Techcombank), ACB, Vietnam Export Import Commercial Joint Stock Bank (Eximbank), Southeast Asia Commercial Joint Stock Bank (SeABank), Military Commercial Joint Stock Bank (MB), also delayed the annual general Meeting of Shareholders before June 30, with the expectation that the disease would pass. It was likely that these banks would submit completely new business plans to shareholders when the meeting was held.
Of course, at present, it was not possible to talk about what the new figures would look like because the Covid-19 epidemic was still complicated. Le Huu Duc, Chair of MB’s Board of directors, said that the Bank would follow the direction of the State Bank of Vietnam (SBV), trying to control the bad debt ratio below two percent. In the challenging context of the disease, MB would reduce operating costs; personnel would be maintained as in 2019, and labour productivity would be improved.
