The Covid-19 epidemic has negatively affected every aspect of socio-economic life, people and businesses, forcing banks to proactively restructure debts to limit the rapidly increasing risk of bad debts.
Speaking at the 2020 annual general meeting (AGM) held on June 25th, Pham Doan Son, general director of Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) said that the restructuring of debts for customers hit by the Covid-19 epidemic has affected the bank’s profit.
According to Son, at the beginning of the year, the bank’s leader board expected a profit of 2.3 trillion dong in 2020. However, due to the epidemic, the bank adjusted its profit target down to 1.7 trillion dong, down by 17 percent compared to the results in 2019 and expected to lower a minimum dividend payment of eight percent.
Regarding the debt restructuring. LienVietPostBank has restructured about five trillion dong of debts. In addition, the lowering of interests to support customers has also lead to a decline of about 300-400 billion dong of profits, but the overall result remains stable.
In the first five months of the year, LienVietPostBank recorded nearly 830 billion dong in pre-tax profit, 208 trillion dong in total assets, 168.3 trillion dong of mobilisation in market 1, and nearly 148.6 trillion dong of outstanding credit in market 1.
“As estimated, by the end of June 2020, the bank will achieve about one trillion dong of pre-tax profit, thus, the completion of the 1.7 trillion dong profit target this year is feasible,” said Son.
At Military Commercial Joint Stock Bank (MB), the restructuring of debts for customers influenced by the Covid-19 has affected nearly seven trillion dong of the bank’s outstanding credit. Thus, its profit is forecasted to fall by 10 percent this year.
At the AGM on June 24th, MB’s leader said that in the first five months of 2020, the bank generated over 8.1 trillion dong of revenue, up by 10 percent compared to the same period of last year. The profit of the parent bank alone in the same period reached 3.964 trillion dong, up by five percent.
According to Luu Trung Thai, MB’s vice Chair of the Board of directors (BOD) cum general director, MB’s profit in the first half of 2020 reached the target and was only two to three percent less than the same period of last year. This year, the bank targets nine trillion dong of pre-tax profit and 12 percent growth in credit.
Do Minh Toan, general director of Asia Commercial Joint Stock Bank (ACB) said that due to the impact of the Covid-19 epidemic, the credit growth this year of ACB is slower than the previous years. The bank’s total operating income dropped by more than 30 percentage point. ACB restructure debts for customers by June 30th and then September 30th. As expected, the total restructured debts will be about 15 trillion dong.
According to Toan, as of May 31st 2020, ACB’s profit was 2.5 trillion dong. Thus, by the end of June 2020, ACB is likely to complete 50 percent of its profit goal for the whole year.
In 2020, ACB aims at a pre-tax profit of about 7.636 trillion dong, total asset growth of 12%, 12 percent increase in mobilisation of customer deposits, 11.75 percent increase in credit according to the target assigned by the State Bank of Vietnam (SBV), bad debt ratio of under two percent. As of early June 2020, ACB’s credit growth was four percent compared to the beginning of the year.
For Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), the bank’s Chair of BOD Nghiem Xuan Thanh said that the bank has restructured about 10 trillion dong of outstanding loans for customers affected by the epidemic. “Vietcombank lowered 10 percent of the total interest payable from April 15th to June 30th for customers affected by the Covid-19 epidemic, causing a profit decline of about 2.420 trillion dong,” said Thanh.
Acting general director of Export Import Commercial Joint Stock Bank (Eximbank) Nguyen Canh Vinh said that up to now, the bank has restructured about six percent of the total outstanding loans (equivalent to about six trillion dong of profit) so it has not collected a corresponding amount of accrued interest. Hence, Eximbank’s profit in the second quarter of 2020 is estimated to be about 250 billion dong, equivalent to 50 percent of the profit in the first quarter of the year. Accordingly, Eximbank had to lowered its pre-tax profit target in 2020 to 1.318 trillion dong.
Director of the Credit Department for Economic sectors (the SBV) Nguyen Quoc Hung said that following the direction of the government and the SBV, the system of credit institutions has actively launched credit programmes to support people and businesses affected by the Covid-19 epidemic with loan interest rates falling sharply from 0.5 2.5 percent per annum compared to normal interest rates, or even three to four percent per annum at some banks.
“As of June 8th 2020, credit institutions restructured the repayment term for 249,108 customers with outstanding loans of 172.365 trillion dong; exempted and lowered interests for 403,177 customers with outstanding loans of 1,227,349 billion dong. The bank’s new loans at preferential interest rates recorded an accumulated revenue from January 23rd to date reaching 978.529 trillion dong for 225,514 customers, with interest rates lower than the rates before the epidemic by 0.5 2.5 percent per annum.
