After a series of nine consecutive gaining sessions, the share price of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) reached 89,000 dong, officially returning to the price range before being affected by Covid-19.
Notably, the market capitalisation of Vietcombank in the June 4 session was 330.09 trillion dong, thereby surpassing Vingroup (capitalisation of 324.713 trillion dong) to become the largest listed company on Hochiminh Stock Exchange (HOSE). Session on June 4, the market price of VCB increased by 1.3%, while VIC decreased by 0.8%.
Recently, VCB was the leading stock leading the rise of the VN Index. In the last nine sessions, the market price of VCB has increased continuously for a total of 9.9%. At the same time, VN Index grew by 3.7%.
In the first quarter of 2020, the increase in net interest rate slowed down in both credit and non-credit segments, while operating costs increased by two digits and provision expenses rose by nearly a half, making Vietcombank’s profit before tax down 11.1 percent over the same period last year, reaching 5.222 trillion dong.
The most positive point is that Vietcombank’s credit growth reached 2.8 percent in the first quarter, higher than the industry average of 1.3%, mainly thanks to retail loans. Vietcombank believes that credit risk from home loans is not high in the base case (Covid-19 pandemic would be controlled at the end of June 2020).
Meanwhile, deposit growth is at 0.6%, of which deposits from retail customers increase by 0.3 percent (up by 2.3 percent in retail customers and down by 12.9 percent in SMEs) and deposits from large corporations grow by 1%.
Regarding the statement of the deputy Governor of the State Bank of Vietnam (SBV), Vietcombank must spend about 30-40 percent of profits in 2019 to support the economy through reducing lending interest rates and reducing fees. According to the SSI Securities Corporation at the latest analyst meeting, Vietcombank’s representative said that the total profit reduction from this support depended on the evolution of the disease. However, in the base case, it will not be so much.
Income from written off bad debt was 958 billion dong, down 16.3 percent in the first quarter of 2020. Debt collection activities were difficult due to the Covid-19 pandemic and might slow down in the coming quarters.
Also in the first quarter of the year, the bank narrowed its interbank operations, due to a decline in interbank borrowing demand amid a decline in credit growth.
Another noteworthy content in the meeting was that Vietcombank’s insurance sales were started in mid-April 2020 with the plan of not much commission income from insurance in the first year. Prepaid fees will be recognised based on the revenue target completion rate, as agreed with FWD in the contract.
