Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank) has announced the consolidated financial statement in 2018 with pre-tax profit of 7.345 trillion dong, up by 63 percent over 2017.
This huge profit of Agribank was formed by different components. The first component is the profit from credit activities. In 2018, Agribank recorded up to 40.877 trillion dong of net interest income, up by 21 percent, being in the first position in the system with a large gap with the second position Commercial Joint Stock Bank for Industry and Trade of Vietnam (BIDV) with nearly six trillion dong of net interest income.
The non-credit activities also brought significant profits to Agribank. In 2018, the bank attained 3.763 trillion dong of net profit from credit activities, up by 23 percent; and 704 billion dong from foreign exchange segment, up by 32 percent.
Particularly, Agribank earned up to 8.023 trillion dong of net profit from other activities in 2018, up by 58 percent. Notes to the financial statement showed that, the majority of this huge profit came from the settled debt principals and a significant part was from the interest collection of the settled bad debts.
The above three components helped Agribank’s total operating income reached 53.142 trillion dong in 2018, up by 25 percent compared to 2017. After deducting operating expenses, the net profit of Agribank reached up to 29.063 trillion dong, up by 26 percent and is the highest level in the system of commercial banks.
However, because the bank’s provisions for risks were up to 21.718 trillion dong (up by 16 percent), its pre-tax profit remained 7.345 trillion dong, up by 63 percent but behind some smaller banks.
It is known that of the 21.718 trillion dong of the risk provisioning expenses, up to 9.678 trillion dong were the provisions for Vietnam Asset Management Company (VAMC)’s bonds, and the remaining 12.039 trillion dong were the provisions for customer loans.
By the end of December 31st 2018, VAMC’s bond value before provisioning at Agribank remained only 2.355 trillion dong, which means that the pressure of provisioning for risks of the bad debts at VAMC in 2019 is very low, and the profit growth of Agribank will therefore become brighter in 2019.
By the end of 2018, Agribank’s total assets were 1,280 trillion dong, up by 11 percent after one year. In particular, the outstanding customer loans exceeded 1,000 trillion dong, up by 14.3 percent. This impressive number helped Agribank maintain the first position in credit market share in Vietnam.
The on-balance sheet bad debt ratio of Agribank by the end of 2018 was 1.6 percent. If including the unprovisioned bad debts at VAMC, the bank’s bad debt ratio is 1.83 percent, still much lower than the three percent limit regulated by the State Bank of Vietnam (SBV).
Regarding capital source, Agribank’s equity by the end of 2018 was 58.180 trillion dong, up by 20 percent after one year. This impressive growth was not only thanks to the retained profit, but also from the bank’s stop in consolidating Agribank Financial Leasing Company (ALCII) after the court announced the bankruptcy of this company, helping Agribank’s equity increase by 7.107 trillion dong.
Meanwhile, customer deposits continued to be the bank’s largest source of capital with 1,100 trillion dong, of which 12 percent were demand deposits.
