The business results of the four largest banks in the system are basically clear with different colours.
Restructuring efforts
At conference held in the afternoon of January 10th, Le Duc Tho, Chair of the Board of directors (BOD) of Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) said that the bank’s profit in 2019 exceeded the target. Specifically, the pre-tax profit was two percent higher than the profit plan adjusted in early December 2018 at VietinBank’s extraordinary shareholders meeting (6.7 trillion dong), reaching 6.834 trillion dong.
“The profit result exceeded target but was lower than 2017 as the bank raised the operating standards, assessed and classified debts more substantially according to new standards. This in the long run will ensure the sustainable and effective development of VietinBank, while also demonstrating the bank’s initiative in reviewing and restructuring its operation and strict compliance with the instructions of the Central Party Committee, the State Bank of Vietnam (SBV), and the Party Committee on restructuring commercial banks,” said Tho.
Tho added that the inspection, internal control and risk management were paid adequate attention in which the process of lending from customers, appraising, approving and disbursing loans and lending to risky areas were strictly controlled.
The measures to recover overdue and bad debts were promoted. The bank also comprehensively and flexibly applied measures of Resolution 42 to accelerate the bad debt settlement and the sale of debts under market mechanism, ensuring maximum recovery for banks with strict compliance with the provisions of the law.
Meanwhile, Chair of the BOD of Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank) Trinh Ngoc Khanh said that although there are still prosecuted cases and trials to judge the personal liability which caused losses to Agribank; and massive withdrawals of deposits when the mass media announced the bankruptcy of the Agribank Leasing Company II (ALCII) but the bank has made full and timely payments, ensuring safe and effective business operations.
“This affirms that Agribank has overcome a difficult period and stood firm in competition. We continued to complete before the deadline the restructuring plan associated with bad debt settlement in the 2016-2020 period. The bad debt ratio of Agribank fell to 2.78 percent in 2018 as required by Resolution 42. With nearly 26 trillion dong which were provisioned, the bank is capable of buying all the bad debts sold to Vietnam Asset Management Company (VAMC) and timely handling the bad debts arising in 2019,” Khanh stressed.
Closing the year 2018, Khanh said that Agribank has fully completed the business plan targets assigned by the SBV and the Ministry of Finance. In particular, the bank’s total assets reached nearly 1,300 trillion dong; mobilisation fund was over 1,200 trillion dong; and outstanding loans reached nearly 1,100 trillion dong.
The positive economic growth has helped Agribank to not only lower its on-balance sheet bad debt ratio to 1.51 percent and increase service revenue to above 20 percent but also recover nearly 12 trillion dong of debts which were sold and provisioned for risks, accounting for 14 percent of the total outstanding settled debts. This number contributed significantly to the bank’s profit of 7.525 trillion dong in 2018.
The records
Phan Duc Tu, Chair of BOD of Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) said that based on the implementation of the directions of the government, and the SBV’s Board of leaders, BIDV has achieved fairly comprehensive results in terms of scale, structure, quality, efficiency and institutional development.
Specifically, the bank’s total assets reached 1,283 trillion dong, up by 9.1 percent; outstanding loans and investment reached 1,214 trillion dong, concentrating on short-term credit and increasing right from the beginning of the year with focus on priority areas as instructed by the government. The short-term outstanding loans of BIDV accounted for 60.4 percent of the total outstanding loans, and the short-term credit turnover was 3.9 rounds, the highest ever.
In addition, BIDV’s total mobilisation fund was 1,202 trillion dong, meeting the credit demands and ensuring safety ratio as required. In addition, the bank’s credit quality was controlled with bad debt ratio of less than 1.4 percent and credit structure shifting strongly to small and medium-sized enterprises (increased by 20 percent, accounting for 25.4 percent of the total outstanding loans), focusing on agriculture and rural areas. BIDV’s profit in 2018 grew by 13 percent over 2017, equivalent to 9.9 trillion dong of pre-tax profit, the highest number ever of BIDV.
“Particularly, the structure and governance of the bank has seen a positive and fundamental shift in both customer base, portfolio, asset structure. The bank has developed its institution based on the Basel 2 standards and international practices, offering good services to nearly 10 million personal and institutional customers,” Tu emphasized.
Meanwhile, the orientation of “Buying wholesale and Selling retail” in 2018 with three pillars including retail, services, and capital trading and investment has brought Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) a breakthrough year in profit.
Particularly, the pre-tax profit of the bank was 18.016 trillion dong, completing 120.1 percent of the 2018 plan, up by 63 percent compared to 2017. This number is also 50 percent of the bank’s target in its restructuring plan, 35 percent higher than the target set at the beginning of the year, and nearly three times higher than the profit in 2015. Vietcombank’s consolidated profit reached 10.346 trillion dong, completing 138 percent of the plan assigned by the general Shareholders Meeting, up by 62 percent over 2017.
“The profit of more than 18 trillion dong in 2018 has helped the bank to not only take the lead in State Budget contribution but also become the highest capitalised bank among listed banks,”, said Vietcombank’s Chair of BOD Nghiem Xuan Thanh.
Along with the huge profit, Vietcombank’s bad debt recovery achieved impressive results with on-balance sheet bad debt ratio (classified under international standards) of 0.97 percent, the lowest level among large commercial banks. The bank’s outstanding bad debts on-balance sheet was 6.181 trillion dong, while its risk provisioning fund reached 10.490 trillion dong and off-balance sheet bad debt recovery was 3.271 trillion dong.
Notably, the risk management according to the best international practices has made great strides when Vietcombank became the first state-owned banks to meet and carry out the Basel II standards, one year earlier than the SBV’s regulation.
In particular, the successful sale of shares to foreign investors GIC and Mizuho, with a total selling value of nearly 6.2 trillion dong has made Vietcombank the largest bank in terms of equity in Vietnam, creating a foundation to meet the capital safety requirement according to Basel II standards for sustainable development in the future.
