Failure to complete the year’s profit plan, high bad debt, high-level personnel change, cheap stock, etc. are issues that many bosses of small banks have to face shareholders at this year’s annual general meeting (AGM) season.
The AGM season of banks will officially begin this March, along with fears of many bankers after experiencing a difficult business year. Contrary to the massive profit announcement of banks over the last period, many small banks only want to hide themselves because of bubby profits. Some banks with trillion dong capital only earned a few tens of billion dong profits, not achieving the set targets.
For example, last year, the National Joint Stock Commercial Bank (NCB) only earned more than 30 billion dong pre-tax profit. In spite of improving a lot compared with the previous year, the lowest interest rate in the system caused NCB’s NVB-coded shares to continuously top the list. That is not to mention the mistakes of the former leader of Navibank (predecessor of NCB) still affect the bank’s reputation until now.
Or VietAbank’s pre-tax profit in 2017 only hit 150 billion dong, far below the set target of 253 billion dong. That is not to mention, the capital mobilisation and credit growth was low, and the plan to increase capital to 4.2 trillion dong still could not be implemented, which are very worth worrying issues for the development of this bank.
More optimistically, Vietinbank achieved 263 billion dong profit in 2017. However, this profit is just enough to clear the accumulated losses till the end of 2016 at more than 262 billion dong. As of the end of 2017, Vietinbank’s non-distributed profit remained at 0.4 billion dong only.
Especially, according to the regulation of the Ministry of Finance, many banks should have been listed since the end of 2017, but so far, they are still unmoving such as NamA Bank, VietABank, OCB, etc. The unwillingness to list caused data of these banks to be less public and transparent.
So far, many banks still have not dared to announce financial statements in 2017. Nam A Bank has just issued Q1/2017′s financial statement; SaigonBank, SCB have justed had Q3/2017′s financial statements; Bao Viet Bank has just released H1/2017′s financial statement, etc.
A clear move of banks that are restructuring is that from the beginning of this year, senior personnel has continuously changed, typically Kienlong Bank, SeABank, and ABBank. Earlier, within the past one than one year, VietABank changed CEO positions twice, NCB changed both Chair, general director, board members and deputy general director, etc.
With personnel change efforts, many bank leaders expect a new wind for 2018 with business plans that can convince shareholders.
However, according to economic experts, after a period of restructuring, although health has been improved, for small banks in general, the target of restructuring operations and managing still cannot be achieved.
Among nine ailing banks that are forced to restructure in the first phase (SCB, De Nhat, Tin Nghia, Habubank, TPBank, GPBank, Navibank, TrustBank, Western Bank) and some ailing banks in the second phase such as Eximbank, Dong A Bank, etc., except for TPBank, no more bank has actually succeeded.
The pressure for small bank leaders is growing, not just from shareholders but from a series of new regulations that took effect from the beginning of 2018.
According to Dr Nguyen Tri Hieu, the revised Law on credit organisations which came into effect from January 2018 opened up opportunities to be supported, helping ailing banks to recover quickly. However, the Law also put pressure on many banks that refrained from speeding up restructuring.
“Banks will have to strengthen the restructuring, improving competitiveness if they want to survive, instead of prolonging their weakness because of relying on the State Bank’s protection against bank’s bankruptcy”, said Dr Hieu.
Apart from the aforementioned law, the scheme on “restructuring the system of credit organisations associated with bad debt settlement in 2016-2020″ issued by the prime minister in 2017 will also put pressure on the restructuring process of banks in this year.
