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Banking & Finance

ACB hit $73.7 million in 2016's pre-tax profit

Released at: 12:00, 05/02/2017

ACB hit $73.7 million in 2016's pre-tax profit

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ACB's management board has shown interest in acquiring PTFinance.

by Duy Anh

ACB’s pre-tax profit in 2016’s fourth quarter reached VND422 billion ($18.6 million), up 89 per cent year-on-year. The full year figure was VND1.667 trillion ($73.7 million), up 26.8 per cent year-on-year. This is according to the bank’s consolidated financial statement for 2016’s fourth quarter.

During the fourth quarter, ACB recorded a net interest income of VND1.946 trillion ($86 million), up 17.6 per cent year-on-year, giving the full year net interest income an increase of 17 per cent year-on-year, at VND6.9 trillion ($305 million).

Other activities of the bank continued to rise from September-December. Services brought a net income of VND283 billion ($12.5 million), up 35 per cent year-on-year, foreign currencies trading had a net income of VND79 billion ($3.5 million), up 23 per cent year-on-year, and securities trading had a net income of VND74 billion ($3.3 million), up 14 times year-on-year.

Notably, operating costs surged by 62.5 per cent to VND1.2 trillion ($53 million) during the quarter. But thanks to its business performance, net operating income was up 3.7 per cent times year-on-year and stood at VND1.07 trillion ($47.3 million). The bank has set aside VND654 billion ($28.9 million) for risk provision cost which is 10 times higher year-on-year. For the quarter, ACB recorded VND422 billion ($18.6 million) in pre-tax profit, up 89 per cent year-on-year.

For the full year, it posted VND1.667 trillion (73.7 million) in pre-tax profit, up 26.8 per cent with after-tax profit VND1.325 trillion ($58.5 million), up 29 per cent year-on-year. As of December 31, 2016, the bank’s total assets stood at VND233 trillion ($10.3 billion), up 16 per cent compared to the start of the year.

Customer lending reached VND163 trillion ($7.2 billion), up 20.7 per cent year-on-year and customer deposits reached VND207 trillion ($9.15 billion), up 18.3 per cent year-on-year. Total bad debts as of the end of the year stood at VND1.42 trillion ($62.7 million), down 20 per cent year-on-year. Its bad debt rate had fallen from 1.31 per cent to 0.87 per cent as of December 31,2016.

The bank’s management report issued last month indicated that ACB’s management board has shown interest in acquiring Posts and Telecommunications Finance Ltd (PTFinance). Founded in 1998, PTFinance has a charter capital of VND500 billion ($22.1 million) and is 100 per cent owned by the State-run telecom provider VNPT.

PTFinance posted a rather modest profit of VND2.8 billion ($123,760) during 2016’s first half. Its total assets stood at VND384 billion ($17 million) by the end of 2016’s second quarter, in which short-term investments took up a huge portion with VND260.4 billion ($11.5 million).

Mergers and acquisitions (M&A) between banks and financial companies has been a trend for the last few years. SHB finished the M&A deal with Vinaconex-Viettel Finance (VFF) after two years of negotiating. With the acquisition of a financial company, banks can participate in the unsecured lending sector, which incurs high risks but even higher returns than other ordinary loans.

In an interview with Forbes last month, ACB’s Chairman Mr. Tran Hung Huy revealed that the bank has been conducting research to acquire a financial company in order to develop unsecured lending products. However, Mr. Huy affirmed that ACB has no plan to grab a piece of this fruitful activity yet due to a fear of deriving bad debts.

ACB's shares price closed as high as VND24,200 ($1.07) after the trading session on February 3. The bank's share value has gone up by 36 per cent since the trading session on January 2 when it closed at VND17,790 ($0.79) per share.

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