According to information from Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank), in the first seven months of 2019, the bank’s total income was recorded at 70.759 trillion dong, up by 11.627 trillion dong, equivalent to an increase of more than 20 percent compared to the same period of 2018. Meanwhile, the total pre-tax expenses reached 62.559 trillion dong, up by 8.503 trillion dong, equivalent to an increase of more than 16 percent compared to the same period of 2018, in which the credit operation costs increased by 19.6 percent.
Closing the first seven months of the year, Agribank’s pre-tax profit was 8.2 trillion dong (after temporarily allocating deductions), up by 127 percent over the same period of last year.
In accordance with Agribank, the bank’s total outstanding loans to the economy are currently over 1,000 trillion dong, in which the proportion of agriculture loans have always been maintained above 70 percent of the total outstanding loans and accounted for over 50 percent of the “Tam Nong” credit in Vietnam.
Agribank’s outstanding consumer loans currently reach nearly 220 trillion dong with more than one million customers, accounting for 22 percent of the bank’s outstanding loans.
Following the direction of the government, Agribank sets a target to increase total assets by at least 10 percent compared to 2018, enhance financial capacity, and strengthen the foundation to be ready for the equitisation roadmap under the direction of the government.
However, the equitisation process is low compared to the plan due to the challenges and obstacles that Agribank cannot solve on its own, said Agribank’s representative.
In addition, this representative said that Agribank is having the largest total assets. The land under the management of Agribank alone has reached nearly three million square meters with the most diversified origin. The bank’s number of customers is the highest with tens of millions of customers having deposit and loan transactions, so the receivables and payables are also the largest. Thus, the valuation of Agribank will also be complicated and time consuming.
In addition, Agribank is currently facing some difficulties and challenges. One of the most difficult problems is raising capital.
From a leading bank in terms of charter capital, Agribank’s charter capital is currently nearly 30.5 trillion dong, the lowest among the “Big 4″ commercial banks.
With the scale of assets, capital and credit investment of more than 1,000 trillion dong, leading the entire system and playing the major role in agriculture and rural credit, Agribank’s annual credit growth is from 11 percent to 14 percent to meet the capital needs of people and businesses.
Particularly, from the end of 2018, the effectiveness of Decree 116 of the government which amended Decree 55 has created more favourable conditions for borrowers without secured assets, but put pressure on Agribank when the bank’s proportion of agriculture loans (mainly unsecured) is over 70 percent, leading to a sharp increase in the size of risk-weighted assets (70 to 80 trillion dong per year).
“This is the main investment field of Agribank but often faces risks of unforeseen disasters, high operating costs and high risks. In addition to competing in raising capital equally as other commercial banks, in the credit structure, Agribank spends a large proportion for priority sectors with low preferential lending interest rates. However, the bank is often in the situation of having not received enough interest rate subsidy,” Agribank’s representative emphasized.
Therefore, in order for the equitisation process to succeed, in addition to its own efforts, Agribank expressed its wish that the government and other ministries and agencies actively collaborate to support the bank to soon remove difficulties, improve financial capacity, increase the ability to provide capital to the economy, and enhance self-control in business administration.
