On June 22, the Board of Directors of Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) (HoSE: CTG) approved a plan to transfer 50 percent of the capital of VietinBank Leasing Finance Company Limited (VietinBank Leasing) and change the legal form. Specifically, VietinBank would sell 49 percent of VietinBank Leasing’s capital to Mitsubishi UFJ Lease & Finance and one percent of equity to another domestic investor. At the same time, the Board of Directors also approved the transfer of the legal form of VietinBank Leasing from one-member limited liability companies to limited liability companies with two members and above after transferring a part of charter capital.
The Board of Directors had approved payment and temporary account contract between VietinBank, Mitsubishi UFJ Lease & Finance and Hochiminh City MUFG Bank (a branch of a major shareholder of VietinBank); Agreement on the temporary settlement of payment accounts between VietinBank and domestic investors and Indovina Bank Limited (Associated Company of VietinBank). The bank would coordinate with the receiving partners to prepare the documents and obtain the approval of the competent authority for the conversion of the legal form of VietinBank Leasing.
According to the 2019 annual report, VietinBank Leasing was 100 percent owned by VietinBank, operating in the field of financial leasing for businesses, individuals, households, and other organisations that were subject to the loan of credit institutions.
By the end of 2019, the total assets of VietinBank Leasing reached 3.030 trillion dong, with an increase of six percent compared to the beginning of the year. The bank’s total income reached 274 billion dong, an increase of 10 percent compared to 2018, the amount mainly from financial leasing activities reached dong 272 billion, an increase of 33 percent compared to 2018. Total expenses were 152 billion dong, an increase of 15 percent compared to 2018.
The total loan balance for financial leasing reached 2.778 trillion dong, an increase of 12 percent compared to 2018. Group Two debt accounted for 2.7 percent of total financial leasing loans. The non-performing loan (NPL) ratio accounted for 0.4%. The profit before tax in 2019 of the Company was 122 billion dong, declined by seven percent compared to 2018, mainly due to the increase in the cost of capital.
Divesting capital from subsidiaries and associates was one of the options to help VietinBank increase its capital adequacy ratio, in the context of growing difficulties in charter capital. The bank was submitting a share dividend plan, but it had not been allowed by the authorities.
Last year, the bank divested at Saigon Bank for Industry and Trade (Saigonbank) a part of the capital in VietinBank Jewellery Gold and Silver Company, VietinBank Fund Management One Member Limited Company. Also, the bank was continuing to follow the progress of restructuring the investment portfolio and subsidiaries.
Besides, VietinBank also raised Tier two capital through issuing bonds. Recently, VietinBank planned to offer 11 trillion dong of bonds in 2020.
