In the 2019 annual report published recently, Vietcombank stated that in 2020, the global economy is facing the risk of recession when the Covid-19 pandemic broke out in China and has widespread on a global scale. Global production has been stagnant; while the consumption, investment and trade have been on a downturn. China’s production index in February dropped to 37.5 points, the lowest level since 2004.
Meanwhile, the risks of reducing growth still exist, such as the US China trade war, the increasing governments and people’ debts, the geopolitical and political instability, the climate change, etc. the governments and central banks of many countries have been easing monetary policies and launched economic support packages to overcome difficulties caused by the disease.
Vietcombank believes that Vietnam’s economic growth will be affected by the epidemic due to its high openness and heavy dependence on the markets currently hit by the epidemic. Meanwhile, the positive factors from the EU-approved EVFTA only take effect as early as the third quarter of 2020.
“Year 2020 is forecasted to be very challenging for the banking industry in the context when the economy has been greatly affected by the epidemic and the international situation is unpredictable. Meanwhile, the pressure of changing and innovating is huge as competition continues to be fierce in the traditional banking segment as well as digital banking segment, and is also growing between banks and fintech companies,” Vietcombank’s report emphasized.
In 2020, Vietcombank’s Board of directors said that the bank will focus on implementing four strategic breakthroughs and three focus points in business restructuring.
Specifically, the four strategic breakthroughs include: renewing the growth model and restructuring business operations; completing the system of mechanisms and policies (internal governance and mechanisms and policies for customers); improving the human resource quality, focusing on the capacity to adapt to digital banking; completing and upgrading the information technology system, deploying digital banking.
With three focus points on business restructuring, Vietcombank will gradually reduce the credit growth, associated with sustainable and efficient credit restructuring. Accordingly, the bank will increase the proportion of retail outstanding loans with the Retail Target Operating Model (RTOM) as a platform, and increase the ratio of secured assets in total outstanding loans.
Vietcombank will also increase the proportion of non-credit income, focusing on income from service activities and capital investment.
In addition, the bank will restructure its capital sources in the direction of efficiency and sustainability.
Regarding the detailed plan, Vietcombank emphasized that It will increase the proportion of retail credit and expand credit growth from transaction office channel.
Along with that, the bank will develop many products that are suitable for different customer segments, standard products, asset management products, and products for production and business areas, etc. Wholesale credit will also be promoted for the new wholesale customers who meet Vietcombank’s credit conditions.
In addition, Vietcombank will enlarge the outstanding loans with large Foreign Direct Investment (FDI) customers with low credit risks and potential of using overall services.
The bank will increase the volume of secured loans, select medium and long-term projects with high effectiveness associated with the use of overall banking services in order to ensure control of the ratio of short-term capital used for medium and long-term lending, in accordance with the regulations of the State Bank of Vietnam (SBV).
In parallel, the bank will reduce credit to risky areas, customers without secured assets, customers with potential risks, customers who do not bring overall benefits to Vietcombank.
The bank will also review and restructure interest rates for customers having both deposit and credit balance at Vietcombank. It will review and strictly control doubtful debts, debts which potentially become bad debts, make recovery plans.
Notably, Vietcombank said it would increase charter capital from retained earnings and surplus, and raise capital through a private placement as soon as the bank is approved by the competent authority.
