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Banking & Finance

Vietcombank's after-tax profit rises 28%

Released at: 09:45, 23/01/2017

Vietcombank's after-tax profit rises 28%

Fourth quarter financials reveal handsome results for 2016 as a whole.

by Duy Anh

Vietcombank, Vietnam’s biggest lender by market value, saw its 2016 after-tax profit surge 28 per cent while its bad debt ratio was kept at 1.48 per cent as at December 31, the bank’s consolidated financial statement for the fourth quarter of 2016 reveals.

Pre-tax profit stood at VND2.2 trillion ($97 million) in the fourth quarter, for VND8.5 trillion ($377.5 million) during the year as a whole, up 24 per cent against 2015. After-tax profit reached VND6.85 trillion ($303.3 million), up 28 per cent.

Customer deposits totaled VND590 trillion ($26.14 billion), a 17.7 per cent increase year-on-year, while customer loans stood at VND460 trillion ($20.38 billion), 18.8 per cent higher.

Total assets were VND788 trillion ($34.92 billion), up 17 per cent year-on-year, and charter capital rose 35 per cent to VND35.9 trillion ($1.59 billion) as at December 31.

In the fourth quarter alone, Vietcombank’s interest income rose 10 per cent to VND4.88 trillion ($216.2 million), contributing significantly to the annual figure of VND18.5 trillion ($819.7 million), which was a 19.8 per cent increase year-on-year.

Operating costs during the fourth quarter stood at VND2.48 trillion ($110 million), up 5.2 per cent year-on-year. Risk provision costs surged 40 per cent in the quarter, to nearly VND1.9 trillion ($84.2 million), with full-year risk provision costs standing at VND6.41 trillion ($284 million).

Earnings-per-share (EPS) improved, rising 16 per cent to VND1,897 ($0.08). As at the end of 2016, bad debts totaled VND6.84 trillion ($303 million), equal to 1.48 per cent of total outstanding loans and down 0.36 per cent compared to the beginning of the year.

Vietcombank was the first lender to buy back all debts it sold to the Vietnam Asset Management Company (VAMC). The initial amount of cumulative debts was VND6.5 trillion ($288 million), while the value of VAMC’s bonds in exchange was only VND4 trillion ($177 million).

Its share price rose 36 per cent during the year, giving it a market value of $6.2 billion. The lender trades at about three times the book value, compared with an average of 1.1 times for listed Vietnamese banks.

According to foreign media, Singaporean sovereign fund GIC Pte has hit a snag in seeking government approval for its planned investment in Vietcombank. GIC said in August it had reached preliminary agreement to purchase 305.8 million new Vietcombank shares, equal to a 7.7 per cent holding, at a discount to the market price, for less than $400 million.

The deal, originally expected to be completed by the end of last year, is yet to be approved by Vietnamese authorities while the government has withheld approval in part because GIC proposed buying the stock at less than the market price, according to Bloomberg.

Vietcombank’s biggest shareholder, the State Bank of Vietnam, owns 77 per cent, while the Mizuho Financial Group Inc. is its second largest shareholder, with 15 per cent.

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