Photo: Duc Anh
Bank records a host of poor indicators for first half and second quarter.
The Vietnam Commercial Export and Import Bank (Eximbank) recorded poor business results during the first half of 2016 following internal conflict between the main shareholder groups.
The bank has recently released its second quarter consolidated financial statement, with bad debts standing at 5.3 per cent of total debts as at June 30 while first half pre-tax profit was down 88 per cent year-on-year.
As at June 30 the bank’s lending balance stood at VND80.8 trillion ($3.6 billion), down 4.62 per cent compared to the end of 2015. Its credit balance was VND100.7 trillion ($4.5 billion), up 2.33 per cent compared to the end of 2015, with total assets at VND121.7 trillion ($5.4 billion), down 3.3 per cent compared to the end of 2015.
Net operating profit in the second quarter was VND372 billion ($16.7 million), up 90 per cent year-on-year. However, credit risk provisions also doubled the figure in the second quarter of 2015, at VND324 billion ($14.5 million) as at June 30.
After deducting costs and credit risk provisions, Eximbank’s pre-tax profit for the quarter stood at VND49 billion ($2.2 million), a 69 per cent increase year-on-year. Despite the positive result, pre-tax profit for the first half reached only VND79 billion ($3.5 million), a decline of 88 per cent year-on-year.
Bad debts stood at VND4.3 trillion ($192.8 million) as at June 30, equal to 5.3 per cent of the total and up significantly from the 2 per cent recorded at the end of last year.
As at June 30, sub-prime debts were VND2.4 billion ($107.6 million), accounting for more than half of all bad debts and 13-times higher than at the end of 2015. Doubtful debts stood at VND797 billion ($35.7 million), up 34.8 per cent compared to the end of last year while potentially irrecoverable debts were reported at VND1.07 trillion ($48 million).
On July 18 the bank announced adjustments to its 2016’s financial targets. Pre-tax profit was adjusted to VND400 billion ($18 million), down 44 per cent from the initial target of VND720 billion ($32.3 million). The target for total assets for the year was adjusted to VND134 trillion ($6 billion), down 6 per cent from the initial VND142.5 trillion ($6.4 billion).
The credit balance target was adjusted to VND108 trillion ($4.8 billion), down from the initial VND113.5 trillion ($5.1 billion), while the lending balance target was adjusted to VND100 trillion ($4.5 billion), down from the initial VND105.8 trillion ($4.7 billion).
These adjustments were expected to be announced to shareholders at an extraordinary shareholders meeting. However, the State Bank of Vietnam (SBV) on July 29 requested Eximbank check information regarding shareholders group rights to nominate candidates for its board. Eximbank was therefore forced to postpone the extraordinary shareholders meeting, which was to be held on August 2.
The meeting has been postponed to a date to be decided, according to a document signed by CEO and Board Member Mr. Le Van Quyet and posted on the State Securities Commission and the Ho Chi Minh Stock Exchange websites.
“The most important issue for the bank right now is the reform of its high-ranking members,” according to Board Member Mr. Ngo Thanh Tung. “A transparent board with a sense of justice is critical right now for the bank to overcome this tough period.”
However, as Board Member Mr. Dang Thanh Mai told local media, “the most difficult task right now is to be able to reach a mutual agreement between shareholder groups, in order to hold a successful shareholders meeting.”
Eximbank’s Board of Directors now consists of nine members, including Mr. Cao Xuan Ninh, an official from the central bank. Mr. Ninh joined Eximbank in mid-December last year but tendered his resignation due to personal reasons at the end of March. His resignation has not been ratified as yet since the first two annual board meetings earlier this year failed to gain a quorum of 65 per cent of shareholders.
- consolidated financial statement
- bad debt