In the annual report recently released, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) said that in 2020, the world and domestic economy were forecasted to still contain many challenges and risks from trade and politics tensions among the major economies. In addition, unpredictable movements of the acute respiratory infections caused by corona virus (Covid-19) have negatively affected the world economy, and a number of domestic economic sectors.
With unpredictable movements and major impacts of the epidemic, Vietnam’s economy has been affected. The disease negatively impacted on the operation of enterprises, especially on those with large trade activities with partners from China, Korea, European countries, and the US.
Therefore, VietinBank’s Board of directors assessed that the business activities of commercial banks also faced many difficulties and were major challenges in implementing the business plan targets of VietinBank in particular as well as the system of commercial banks in general.
Meanwhile, VietinBank’s Executive Board emphasized that the impact of the disease as early as 2020 could have an impact on the economy, requiring banks to make efforts to support and overcome the business.
“This is also a factor that can affect the growth as well as the profitability of banks in 2020,” VietinBank management said.
In 2020, VietinBank aims to grow its total assets by three to five percent compared to 2019. Credit balance is up by six to ten percent; while mobilised capital is expected to increase by six to ten percent.
Target bad debt ratio is below two percent.
VietinBank’s management stated that this year, the bank would focus on sustained in-depth growth by strongly promoting the growth of the small and medium-sized enterprise segment (SMEs) and retail to improve profitability, giving priority to credit for business development, increasing the proportion of high-yield and risky products within the control limits in the retail loan portfolio.
Along with that, the bank would selectively grow a portfolio of large corporate customers and customers with foreign direct investment (FDI), focus on customers with high total benefits, and potential to cross-sell and sell more products.
At the same time, it expands the scope of effective application and exploitation of policies and mechanisms specifically designed for each region/customer/commodity. Moreover, they bank chooses the relationships with customers who are in good business and financial situation, meeting credit conditions.
Vietinbank will also increase the proportion of non-credit income (focus on service income) to total income; improve comprehensively the quality of products and services to customers; provide comprehensive financial solutions to customers; and strongly develop payment and investment banking activities.
VietinBank also intends to join the current account savings account (CASA) race by focusing on growing low-cost capital such as foreign currencies and payment deposits.
Regarding bad debts, VietinBank’s Board of directors emphasized that they would focus resources with the best effort, comprehensively and flexibly apply existing mechanisms and policies to accelerate the recovery of bad debts and settled debts, debts bought by Vietnam Assets Management Company (VAMC). At the same time, it thoroughly overcomes the identified limitations and shortcomings, preserves the growth efficiency and increases the income from debt collection activities.
In terms of costs, the bank aims to manage costs more effectively, continue to control the growth rate of expenses lower than the growth rate of income, monitor the CIR rate, and improve labour productivity.
Regarding the issue of raising capital, the Board of directors of VietinBank said that it would closely follow the capital raising plan which was submitted to the government for consideration and approval.
Along with that, to ensure compliance with regulatory requirements, VietinBank will continue to be proactive in regulating reasonable credit growth, issuing secondary bonds to increase secondary capital, divesting a number of subsidiaries, reducing the size of secondary capital bonds that VietinBank has invested in, and optimising the structure of risky asset portfolio.
In addition, control the size of risky assets in the direction of prioritising low-risk assets, establishing limits of risky assets, risk factor limits, and implementing pricing mechanisms and evaluate the effectiveness on the basis of risk.
