Viet Capital Securities Company (VCSC) has released assessment report about Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank).
According to VCSC, the Net Interest Margin (NIM) of VietinBank ranges between 2.8 percent to three percent in the medium term while retail lending proportion continues to increase.
VCSC forecasts that 2018 credit growth will reach 16.5 percent, approximating the credit growth of the entire system while retail sales out of total outstanding loans will increase two percentage points to 27 percent, thereby raising the non-interest income ratio to 19 percent.
VCSC believes that Vietinbank’s income growth from service fee is positive. However, large asset scale creates some challenges for Vietinbank in raising the total non-interest income out of the total operating income to 20 percent in 2018.
VietinBank divested from Vietin Aviva Life Insurance in 2017. Excluding the extraordinary profit from this deal, the non-interest income accounts for 15 percent of Vietinbank’s total income from operations (equal to 2016).
“With large assets and non-interest income in 2018 forecasted to increase 19 percent, we are optimistic about Vietinbank’s fee collection, and we suppose that the bank is difficult to raise the non-interest income ratio to 20 percent. We forecast that the net fee income will increase 16 percent thanks to the improved integration of I.T, transaction service and insurance service via Vietinbank Insurance”, said VCSC.
Regarding the capital mobilisation, VietinBank’s management board said they will continue increasing secondary debt to raise capital base in this year, thereby maintaining the minimum CAR following Basel I at about 10 percent.
“VietinBank has submitted an application for Tier 1 capital increase to the State Bank to continue developing but the aforementioned capital mobilisation is still in the early stage and is difficult to be implemented in 2018. If the capital mobilisation is implemented in 2019, we suppose that VietinBank needs to be valuated much higher”, said VCSC.
