Vietcombank plans zero growth on this year's mobilisation
20-NOV-2008 Intellasia | Saigon Times Daily page 1
Nov 20, 2008 - 7:00:00 AM
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The giant Bank for Foreign Trade of Vietnam, or Vietcombank, has sought shareholders' approval to revise some scheduled business figures for this year, including no growth in mobilisation for the year.
Besides mobilisation, other targets have also been revised compared to the plan approved in the first general meeting of the bank in April.
Vietcombank's total assets are expected to fall in the rest of the year as the total assets target by the year's end is revised down to 200 trillion dong from the initial 211 trillion dong, although the number as of September already had amounted to 209 trillion dong.
Nguyen Phuoc Thanh, CEO of the bank, told the Daily via telephone yesterday that the macro-economic fundamentals had been very volatile since early this year and banking industry had been affected the most alongside enterprises who were banks' clients.
"Despite the "mobilisation does not grow, Vietcombank must look for good projects and enterprises to finance, so the bank decides to set a growth target of only 15% on outstanding loans this year," Thanh said. The initial plan for outstanding loan growth is 29.2%.
In addition, to share difficulties with enterprises, Vietcombank has cut lending rate to 13.5% per year, which has been the lowest in the market, so it also has to decrease the borrowing rate.
"Decreased borrowing rates should affect the bank's mobilisation but Vietcombank will try to balance its capital sources and ensure the bank's operation," said Thanh.
However, the bank's profit target is revised up slightly to 3.4 trillion dong versus the earlier plan of some 3.38 trillion dong. Vietcombank obtained a pre-tax profit of over 3.42 trillion dong in the first nine months of the year.
Thanh explained the year's planned profit was lower than that in the first nine months because the bank expected that provision for bad debts would increase for the rest of the year when it had to reschedule loans for enterprises as requested by the central bank.
When rescheduling a loan of one client, all credit given to that enterprise must be considered bad debts and banks have to extract provision for those bad debts. Provision for bad debts of the bank this year is to be 50% higher than Vietcombank's expectation, Thanh said.
That is also why Vietcombank increases its non-performing loans (NPL) ratio from 2.6% to 5.8% by the year's end. By late September, the bank's NPL ratio was 5.55%, and the bank's provision for overdue loans was 3.5 trillion dong.
"Expecting the economy to face more difficulty by the year's end and early next year, the bank has considered revising the year's business targets, but shareholders' benefit will not be affected because Vietcombank's profit is higher than expectations," he said.
By late September, Vietcombank's equity was 12.1 trillion dong and the planned equity by the year's end is revised down to 13.1 trillion dong from the initial target of 15.5 trillion dong.
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