Although official numbers have not been officially published, some banks have revealed their business plans for 2020.
In the recent released annual report, Southeast Asia Commercial Joint Stock Bank (SeABank) set a pre-tax profit target of 1.506 trillion dong up by 8.3 percent compared to the previous year. This growth level is fairly modest as SeABank’s pre-tax profit in 2019 increased by more than two times, reaching 1.391 trillion dong.
SeABank also aims to record a growth rate of 12 percent in total assets, reaching 175 trillion dong; 13.6 percent in outstanding credit, reaching 13.6%; 13.8 percent in customer deposits and valuable paper issuance; and controls bad debt ratio below three percent.
For Maritime Commercial Joint Stock Bank (MSB), in the annual report, the bank aims to achieve a credit growth of 20 percent (reaching 81.5 trillion dong) and mobilisation growth of 10 percent (reaching 99 trillion dong) in 2020. The bank expects a pre-tax profit of 1.439 trillion dong, up by 12%. As targeted, MSB’s total assets will increase by about 170 trillion dong, up by eight percent, while bad debt ratio will be controlled below three percent.
The total net revenue of MSB in 2020 of the bank’s retail banking, corporate banking and financial institution sections is set to increase by respectively 40%, 44 percent and 34%, equivalent to a compound annual growth rate (CAGR) of above 30 percent in the period of 2019 2023. The total non-interest income of retail banking and corporate banking sections account for more than 30 percent of the total net revenue.
While MSB and SeABank expect profit growth, Nam A Commercial Joint Stock Bank (NamABank) forecasts a profit decline this year although credit growth is expected to be high.
Specifically, NamABank expects that the outstanding loans will increase by 21.4 percent but the consolidated pre-tax profit will be only 800 billion dong, equivalent to a decrease of 13.47 percent compared to 2019. The bank’s total assets and mobilised capital are expected to increase by respectively 22.51 percent and 22.41%, while the number of credit cards is predicted to rise by 34.56%. The bank’s bad debt ratio is expected to be kept below three percent.
However, it should be noted that the annual reports of these three banks do not specify how the above indicators were built with reference to the forecast about the Covid-19 epidemic.
Meanwhile, as holding the annual general meetings (AGMs) before the social distancing order, Kien Long Commercial Joint Stock Bank (Kienlongbank) and Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) both submitted shareholders the business plans which were built on the expectation that the disease would be under the best control and only last until the end of the first quarter.
Particularly, at the AGM held on March 27th, Kienlongbank’s shareholders approved a business plan with a profit target of 750 billion dong, 8.7 times higher than 2019′s; and credit and mobilisation growth targets of respectively 13 percent and 16%.
In fact, Kienlongbank has a basis for setting this breakthrough growth when the bank expects to record a decrease in accrued interest receivables in previous years, after completing the settlement of secured collateral. The bank also does not have to provision for the debts at Vietnam Asset Management Company (VAMC). Nevertheless, Kienlongbank also said that, this profit plan was built based on the best controlled Covid-19 situation. Based on the actual situation, the bank’s Board of directors (BOD) will report to the general Meeting of Shareholders for appropriate adjustment if the prolonged epidemic negatively affects the business operations.
At the AGM held on March 7th, BIDV’s shareholders approved the profit target of 12.5 trillion dong, up by 16%. However, according to the bank’s Chair of BIDV Phan Duc Tu, this business plan was set out in the scenario of a well-controlled epidemic which would only last until the end of March 2020.
The above goal of BIDV will be very difficult to achieve when it is one of the four key banks to cut lending rates to support businesses hit by the Covid-19. Recently, at the meeting between the prime minister and the leaders of Ministries, deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu said that four state-owned commercial banks will have to cut their profits of last year by at least 40 percent to serve the interest rate cut this year. With profit of more than 10 trillion dong in 2019, BIDV may have to sacrifice more than four trillion dong to reduce interest rates.
Meanwhile, the annual report of Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) only mentioned general plans without specific figures. Meanwhile, Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank)’s annual report expected credit growth of four to 8.5%, mobilisation growth of five to 10 percent and left the profit target open. VietinBank said that it would ensure business efficiency and improve business activities, closely following the disease movements to calculate and update its profit plan.
