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Banking & Finance

Handsome 9M figures for VietinBank

Released at: 08:45, 02/11/2016

Handsome 9M figures for VietinBank

Photo: Duc Anh

VietinBank's business indicators promising in first nine months though potentially irrecoverable debts something of a concern.

by Duy Anh

The Vietnam Commercial Bank for Industry and Trade (VietinBank) recorded strong growth in the first nine months of 2016, with after-tax profit reaching VND5.19 trillion ($232.52 million), up 16.4 per cent year-on-year. Potentially irrecoverable debts, however, may pose a problem.

Total assets stood at VND900 trillion ($40.32 billion) as at September 30, up 15.5 per cent compared to the start of the year. Customer loans and deposits, coincidentally, both reached VND625 billion ($28 million), up 16 per cent and 27 per cent, respectively, year-on-year, Vietinbank’s consolidated financial statement for the third quarter revealed.

Net profit from services reached VND393 billion ($17.6 million) in the third quarter, net profit from trading foreign currencies nearly VND131 billion ($5.87 million), and net profit from trading securities VND40 billion ($1.79 million). 

Net losses from investment securities stood at only VND1.3 billion ($58,243) in the third quarter, down significantly from the VND74 billion ($3.31 million) in losses recorded in the third quarter of 2015. Net interest income reached VND5.94 trillion ($266.13 million), up nearly 21 per cent year-on-year.

Operating expenses increased 9.5 per cent year-on-year to VND3.04 trillion ($136.2 million) and provisions for credit losses increased a substantial 53 per cent year-on-year to VND1.96 trillion ($87.81 million). Pre-tax profit reached VND2.21 trillion ($99.01 million) during the third quarter, up 19.8 per cent year-on-year.

Cumulative pre-tax profit after the first nine months stood at VND6.48 trillion ($290.32 million), up 13.2 per cent, while after-tax profit reached VND5.19 trillion ($232.52 million), up 16.4 per cent. Attributable profit was VND5.18 trillion ($232.07 million).

Its bad debt ratio was down slightly to 0.85 per cent in the quarter against 0.92 per cent at the start of the year. Potentially irrecoverable debts increased by 30 per cent to 3.57 trillion ($159.94 million), or 66 per cent of all bad debts.

The bank set targets for 2016 at its annual general meeting in April. Total assets are to reach VND889.55 trillion ($39.85 billion), credit exposure VND798.49 trillion ($35.77 billion) and mobilized capital VND811.44 trillion ($36.35 billion).

Pre-tax profits are to increase 8 per cent year-on-year to VND7.9 trillion ($353.94 million). Return on average assets (ROAA) and return on average equity (ROAE) are expected to reach from 0.9 per cent to 1.2 per cent and 10 per cent to 11 per cent, respectively.

In related news, the Ministry of Finance (MoF) released an official document in June requesting the State Bank of Vietnam direct the representative of State capital in the Bank for Investment and Development of Vietnam (BIDV) and VietinBank to vote for the 2015 dividend payout to be in cash.

BIDV is set to payout 2015’s dividend in cash at a rate of 8.5 per cent per share, as confirmed at an extraordinary shareholders meeting on October 22, while VietinBank has made no indication to MoF on paying a dividend.

Under a plan submitted to VietinBank’s annual general meeting in April there was to be no dividend payout for 2015. Its Chairman was quoted as saying that “this is a necessary decision and has strategic meaning for the bank in improving its financial capability and ensuring its capital adequacy ratio (CAR) and continued development.” The central bank currently holds 64.46 per cent of its charter capital.

Besides wanting to keep all profits from 2015 for the bank’s development, VietinBank also proposed the government consider lifting the foreign ownership limit, in which the State would hold less than 50 per cent of charter capital. VietinBank said this would ensure the ownership and control of the State in the bank while also creating the conditions to attract more resources.

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