In the estimation of SSI Securities Corporation, in the worst-case scenario, three big banks might have negative growth this year.
Unlike every year, up to then, almost no bank had officially announced the profit target of 2020. The annual reports or documents submitted to the general Meeting of Shareholders still stated the credit growth plan, capital mobilisation, bad debt ratio, but did not mention specific profit numbers.
For example, at the shareholder’s report on the business results of 2020 and the plan of 2020 of Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), the bank expected total assets to grow by one percent to three percent, credit balance by four percent to 8.5%, raising capital mobilisation to be at five percent to 10%. However, the report did not have specific profit target numbers, VietinBank leaders only said that they would ensure business efficiency and improve business activities, follow the disease situation carefully to calculate and update the profit plan.
The annual reports of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), HCM City Development Joint Stock Commercial Bank (HDBank), Military Commercial Joint Stock Bank (MB) also did not mention the figures. The content of the 2020 plan was mainly to follow the guidance of the State Bank of Vietnam (SBV), control bad debts and develop digital banking.
BIDV and Kien Long Commercial JointStock Bank (Kienlongbank) had already held the general Meeting of Shareholders. Still, the profit target was built on the well-controlled epidemic scenario, only in Q1/2020. But given the current situation, there might not be any change soon.
In the estimation of SSI Securities Corporation, in the worst-case scenario, the total profit in 2020 of 10 banks, including Asia Commercial Joint Stock Bank (ACB), BIDV, VietinBank, HDBank, Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank), MBBank, Vietnam Technological and Commercial Joint-Stock Bank (Techcombank), Tien Phong Commercial Joint Stock Bank (TPBank), Vietcombank, Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) might increase by less than one percent.
Of which, in this scenario, three banks might have to grow negatively, which were BIDV, VietinBank, LienVietPosstBank. According to SSI’s forecast, BIDV’s profit before tax in 2020 could reach only 10.779 trillion dong, down 0.9 percent compared to 2019.
And at VietinBank, it was estimated that in the worst-case scenario, the bank’s profit could be reduced by 2.3 percent to 11.516 trillion dong; LienVietPostBank decreased by 4.2 percent to 1.954 trillion dong.
Meanwhile, SSI expected that even in the worst-case scenario, ACB’s profit would still increase by 1.6%; HDBank’s increased by 0.4%; MBBank’s increased by 2.4%; Techcombank’s increased by 0.6%; TPBank’s increased by 4.7%; Vietcombank’s increased by 1.6%; VPBank’s increased by 0.1%.
According to SSI, the two banks, ACB and Vietcombank, would have the most prudent strategy to overcome the pandemic and own the best asset quality among the banks studied by SSI.
For ACB, the list of government bonds accumulated in recent years had allowed the bank to borrow from SBV at preferential interest rates. This also gave investors a second benefit, meaning that the bank had more flexibility to be able to sell these bonds and record profits.
Meanwhile, Vietcombank’s leading position would bring the bank more business opportunities to increase profits and fee income.
From 2021 onwards, SSI believed that these two banks would be least affected by the bad debt formed when the worst-case scenario occurred.
