MSB targets nearly VND 1.439trillion of profit in 2020

23-May-2020 Intellasia | Tri Thuc Tre | 6:02 AM Print This Post

Maritime Commercial Joint Stock Bank (MSB) will hold its 2020 Annual general Meeting on May 22nd. According to documents sent to shareholders, although the Covid-19 epidemic took place in the first quarter (Q1) and April and caused many banks to adjust their business targets, MSB still keeps its goals unchanged.

MSB is confident with the ability to control risks and flexible business plan. Specifically, in 2020, the bank targets to increase mobilisation in market 1 and bonds by 10%, reaching 99 trillion dong; expand outstanding loans (including outstanding loans to economic organisations and individuals, investment in corporate bonds) by 20 percent to 81.5 trillion dong; raise total assets by eight percent to 170 trillion dong; and control bad debt ratio below three percent.

The bank expects total retail banking (RB) revenue to increase by 40%, corporate banking (EB) to rise by 44%, and financial institutions to develop by 34%, equivalent to a Compound Annual Growth Rate (CAGR) of over 30 percent in the period of 2019 2023. The total non-interest income of RB and EB is expected to account for more than 30 percent of the total net revenue. The bank’s pre-tax profit in 2020 is predicted at 1.439 trillion dong, up by 12 percent compared to 2019.

Previously, in Q1, the bank attained a pre-tax profit of 290 billion dong, nearly fourfold higher than the same period of 2019.

According to MSB, the above profit plan has taken into account the profit from the sale of MSB’s subsidiary Finance Company Limited for Community (FCCOM). MSB said that by the end of 2019, the bank officially had negotiations to transfer a part of FCCOM’s charter capital to Hyundai Card Company Limited and transform the legal form of the unit. On November 29th 2019, FCCOM officially submitted documents to the State Bank of Vietnam (SBV) for approval of the transfer of shares as prescribed.

Promoting bond purchase at Vietnam Asset Management Company (VAMC)

MSB intends to use the profit from the sale of its subsidiary as a funding source to repay part of VAMC’ bond portfolio. Previously, in 2019, the bank managed to reduced 54 percent of VAMC bond portfolio. Thus, if the profit plan of MSB is favourable this year, the bank will be the next bank to clear its debts at VAMC this year.

The settlement of bad debts at VAMC means that the bank will not have to make provisions for these bonds, thus have more resources for doing business and investing in important plans that contribute to increase profits in the following years.

In 2019, MSB was one of the first nine commercial banks approved by the SBV to apply before the deadline Circular 41/2016/TT-NHNN regulating the capital adequacy ratio (CAR) of banks and foreign bank branches following Basel II international standards.

Since the application of Basel II, MSB has maintained higher CAR than prescribed limit (nine percent), reaching 10.25 percent by the end of 2019. The early application of Basle II is also a foundation for the bank to expect for more priorities in SBV’s policies, such as credit growth limit this year.

MSB’s Board of directors (BOD) plans to propose shareholders to authorise the BOD to withdraw the listing application for the first time on the Hanoi Stock Exchange (HNX).

According to the bank’s explanation, in the context of the widespread Covid-19 pandemic, the stock market recorded record decline sessions in March 2020, and investors lost confidence in their ability to cope with this recession of businesses. This led to the postpones of seminars on introduction and connection of international investment or plans to increase investment capital. Foreign investors continuously sold off on Vietnam’s stock exchanges, negatively affecting the stock prices of most listed companies, including banks.

MSB’s BOD sees that the completion of the listing application at this time could lead to the situation where the starting price of MSB shares when being traded would be lower than the intrinsic value and not be able to attract attention of professional investors and foreign investors. If this happens, it will be a huge loss for shareholders.

Therefore, MSB’s BOD proposed to temporarily stop the activities for listing on the HNX until the stock market movements and the economy are more favourable. MSB will choose the time to restart the listing process at an appropriate time with the core criteria of ensuring benefits for all current shareholders as well as potential shareholders.

According to observers, if MSB’s business goals submitted to shareholders are achieved, along with the bad debt clear off and the application of all three pillars of Basel II (in March 2020), the bank will have a fairly firm stepping stone for the business activities in subsequent years. This is also the basis to help the bank more easily choose the time to list shares on the stock market, increasing its position in the industry as well as attract more attention of domestic and foreign investors.

 


Category: Finance, Vietnam

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