Multiple banks post strong earnings in Q1

At the 2019 annual general meeting on April 23, Tran Minh Binh, general director of Vietnam Bank for Industry and Trade (VietinBank), said that the lender had earned some VND3.1 trillion in profit in the first three months of this year, up over 4% year-on-year, despite a drop in outstanding loans.

Explaining the profit growth, Binh said that VietinBank had restructured its customer base with a focus on highly profitable segments. In addition, its earnings from non-credit activities had surged strongly.

VietinBank’s shareholders at the meeting approved a plan to distribute over VND5.1 trillion worth of profits earned in 2018. Having set aside funds for capital supplementation, risk provisioning and staff benefits, VietinBank retained nearly VND3 trillion.

Shareholders agreed to two solutions: either a share dividend payment at a ratio of 8.03% or no dividend payment to allow VietinBank to use its entire retained profit for a capital hike. VietinBank, however, is still waiting for the relevant agencies to approve these profit-use schemes.

At present, the Government holds 64% of the charter capital of VietinBank. The stake is represented by the State Bank of Vietnam.

In fact, VietinBank over the past few years has been in dire need of share dividend payments or profit retention for a capital hike. Its charter capital has been unchanged at more than VND37.2 trillion since 2013.

In 2018, as the capital hike plan was not approved, the lender had to reduce its credit growth rate, resulting in a 25% slump in profits compared with the previous year.

This year, the central bank has applied Circular 41, asking commercial banks to maintain a capital adequacy ratio of at least 8%, but that of VietinBank is still below that level. Therefore, the bank has an urgent need to raise its capital as soon as possible.

Speaking at the annual general meeting, Tran Hung Huy, chairman of Asia Commercial Bank (ACB), said that the bank had handled debts sold to the Vietnam Asset Management Company and set up provisioning for loans categorized for Groups 2-5.

In Vietnam, debts are classified into five groups based on their risk status — standard debt (Group 1), debt needing special attention (Group 2), subprime debt (Group 3), doubtful debt (Group 4) and potentially irrecoverable debt (Group 5).

In 2019, ACB expects to gain some VND600 billion from bad debt settlement to contribute to the whole year’s profit target of nearly VND7.3 trillion. The lender earned VND1.6 trillion in profit in the first quarter and got approval from the central bank to become the fifth lender in Vietnam to apply Basel II standards, Huy said.

Meanwhile, Sai Gon Thuong Tin Commercial Bank saw its profit double year-on-year to some VND1 trillion in the January-March period, meeting 40% of its entire year’s goal. Its service segment gained 18% to reach VND642 billion, while foreign currency trading soared 109% to hit VND113 billion.

Bank for Foreign Trade of Vietnam reported a profit of nearly VND5.9 trillion in the period, including VND928 billion from foreign currency trading and VND1 trillion from services. Earlier, the lender expected its profit to rise 12% to reach VND20.5 trillion this year.