The chair of Vietcombank, Nguyen Hoa Binh has reported that till late September, the bank’s profit reached 3.4 trillion dong, equalling to the whole last year’s posted figure, which is expected to be four trillion dong in this year. However, through a talk with Dau Tu Chung Khoan, the chair stressed the heavier pressure on banking operation in the following interview.
Although reaching full year’s business results earlier than the plan, Vietcombank’s profit target of four trillion dong was considered to be still low. What do you think?
That’s right. Our profit plan is not high compared with the achieved figure till now, but we need to be cautious because there will be more difficulties from now to the year end and the gap between lending and deposit rates is being narrowed.
Vietcombank’s 3.4 trillion dong profit was thanks to the credit quality being improved and less money deduction for risk standby fund. This year VCB plans to pay a dividend of 12% in cash.
Can you give details on the 9-month profit structure of VCB?
The earnings from credit business contributed about 50% to total profit of VCB. The remainder was earned from banking services. I think the banking operations are very hard to develop, for both lending activity and other aspects. Particularly, the narrowed interest rate difference created many risks and caused a high pressure on banks. The problem was foreseen previously but no choice is better. In services, banks are joining the tenser competition in terms of price and products.
According to State Bank of Vietnam (SBV), the basic rate and compulsory reserve ratio of banks will be retained from now till 2009 end and maybe first months of 2010. Can you tell the future difficulties in capital mobilisation that banks will have to face?
Actually, with above information, capital mobilisation of banks will be very difficult because there are a lot of investment channels with higher profitability. For the fear of the return of inflation, short-term deposits will flow to other channels. Meanwhile, the capital demands of customers is still increasing remarkably thus banks will continue raising deposit rates as a result.
How about the “room” for Vietcombank’s lending growth?
Up to the end of October, the lending growth of Vietcombank reached 24% against the allowable percentage of 25%. Now, Vietcombank is asking SBV governor’s approval on extending the lending growth limit to 28%. Total deposits raised by VCB until late September were posted at 160 trillion dong while the total outstanding loans were estimated at 137 trillion dong.
Can you please reveal information on selecting foreign partners?
Foreign partners are paying much attention to Vietcombank but they have a number of difficulties because of the affects of global economic crisis. We are promoting the share sales to foreign partners; however the official information will not be announced within this year.
In related news, Hochiminh Stock Exchange (STC) announced that November 5 is the deadline for Vietcombank to end the seeking of shareholders’ approval on the capital increase by 9.28% within 2009. The ex-dividend date is November 3, 2009.
Current charter capital of Vietcombank is 12.1 trillion dong. Thus after being raised, Vietcombank’s capital will be nearly 13.223 trillion dong. At present, 9.28% stake of Vietcombank, or 112.285 million VCB coded shares are being listed on the southern bourse.