Vietnam banks aim for high profit in 2017
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At the AGM on March 25, LienVietPostBank’s shareholders agreed on this year’s development plan, aiming to reach US$66.2 million in pre-tax profit, 10 per cent higher than that of 2016 (US$59.5 million).
Furthermore, the expected dividend rate was raised to 12%. LienVietPostBank also planned to raise capital from US$285.1 million to US$309.0 million by issuing 54 million shares.
On April 10, VPBank organised its AGM. According to the AGM’s documents, VPBank’s pre-tax profit goal for this year is US$300.2 million, 38% higher than that of 2016.
Its total assets are expected to reach US$12.4 million and total outstanding loans and corporate bonds US$8.9 million.
With this expected total outstanding loan volume, to ensure the capital adequacy ratio (CAR) of 9% stipulated the State Bank of Vietnam (SBV), VPBank’s total capital must reach at least US$794.5 million.
With its current owner’s equity of VND15.4 trillion (US$679.8 million), VPBank must increase capital by US$132.4-176.6 million.
Techcombank’s documents for its AGM on April 15 showed that the bank is aming to increase consolidated pre-tax profit by 26% over 2016’s US$221.6 million.
This year, Techcombank planned to increase its chartered capital by US$220.7 million (from US$391.9 million to US$612.6 million), and raise its total assets to US$12.4 billion.
Other banks also expect great increases in profit. For instance, at its AGM on April 21, HDBank plans to get shareholders’ approval on the US$72.5 million pre-tax profit target, 28% higher than that of 2016.
Meanwhile, OCB is planning to aim for US$34.4 million at its AGM, 60% higher than the previous year. Also, Vietcombank’s board of directors has set a goal to reach US$406.1 million in pre-tax profit, a 12% increase on-year.
Well-founded optimism
These ambitious figures in expected profit correspond with the results of the survey on business trends in the second quarter of 2017 for credit institutions and foreign bank branches in Vietnam, which was conducted by the Monetary Forecasting and Statistics Department of the SBV.
“For instance, at its AGM on April 21, HDBank plans to get shareholders’ approval on the US$72.5 million pre-tax profit target, 28% higher than that of 2016.”
According to the results, 89.5% of the credit institutions reported improvements in the first quarter of 2017. 90.4% of the institutions expected great increases in pre-tax profit compared to 2016.
The expected average increase for the whole system is much higher than that showed in the survey in December 2016 (+ 13.4%).
The banks’ optimism is due to domestic economic circumstances and good forecasts for the industry.
According to the report on the economic situation in the first quarter of 2017 and forecasts on the fiscal year conducted by National Financial Supervisory Commission (NFSC), aggregate demand will improve in the upcoming time since directions from the government have initiated major increase in public investments in several key projects and capital disbursement in the application of high-tech agriculture projects.
This positive attitude is also due to the fact that, despite the recent wake of US protectionism, based on the economic optimistic potential of the US and the globe at large, the International Monetary Fund (IMF) has forecasted the trade growth of Emerging Markets and Developing Economies at 4% in 2017, higher than the estimated 1.9% for 2016.
A senior leader of the SBV shared with VIR that the bank would adjust the interest rates flexibly, in correspondence to macroeconomic indicators, inflation, and the currency market.
Also, SBV would continue directing credit institutions to balance their capital and interest rates, economise operating costs, and increase business efficiency to lower interest rates.
SBV continues its policy on operating currency rates flexibly, closely following the interbank foreign exchange market, the currency rate on the global market, economic and currency balances, and the monetary policy.
It would also introduce measures to improve credit quality, focus lending on manufacturing and prioritised areas.
“We would closely inspect the credit granting situation in some industries and fields that have high chances of risk, such as medium-long term credit, credit for large customers, credit for real estate, as well as BOT and BT transportation projects,”, the senior leader shared.
Questions & Answers
Q.What overall increase in pre-tax profit do the credit institutions in Vietnam expect for 2017?
What overall increase in pre-tax profit do the credit institutions in Vietnam expect for 2017?
According to a survey by the SBV's Monetary Forecasting and Statistics Department, 90.4% of institutions expect great increases. The average expected increase for the whole system is much higher than the +13.4% projected in the December 2016 survey.
Q.Why are Vietnamese banks optimistic about increased profits in 2017?
Why are Vietnamese banks optimistic about increased profits in 2017?
Their optimism stems from improved domestic economic circumstances and positive industry forecasts. Government directions have initiated major increases in public and high-tech agriculture investments, boosting aggregate demand. Also, the IMF forecasts higher trade growth for Emerging Markets and Developing Economies.
Q.What measures will the State Bank of Vietnam take regarding interest rates and credit quality?
What measures will the State Bank of Vietnam take regarding interest rates and credit quality?
The SBV will adjust interest rates flexibly based on macroeconomic indicators, inflation, and the currency market. It will also direct institutions to balance capital, economise operating costs, and increase efficiency to lower rates, while focusing lending on manufacturing and prioritised areas.
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