SSI Research: BIDV’s profit may increase by 46pct in 2021

27-Feb-2021 Intellasia | NDH | 5:02 AM Print This Post

Saigon Securities Incorporation Research centre (SSI Research) has issued a report on Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV, HoSE: BID), mentioning that after the credit acceleration at the end of 2020 and the decision to pay dividends in 2019 in cash at eight percent, the bank’s Capital Adequacy Ratio (CAR) fell to 8.34 percent from 8.77 percent as of December 31st 2019. The proportion Tier-1 capital was 5.88%. The balance of the Tier-2 bonds is close to the limit.

At the current CAR, SSI Research estimated at BIDV has enough capital for credit growth in 2021 but raising capital is very essential to support future development. The bank has plan to issue a maximum of 8.5 percent of its charter capital in 2019 (equivalent to 341.5 million shares) through public offering or private placement in the period of 2020 2021. The mobilisation of capital will be the main driving force for BIDV in the current period.

BIDV’s business results in 2020 are close to SSI Research’s estimates. This unit estimated BIDV’s operating income to increase by 7.2 percent in 2021. The pre-tax profit is forecasted to reach 13.5 trillion dong, up by 46%.

SSI Research assumes that BIDV will record a credit growth of 10 percent and mobilisation growth (including valuable papers) will be 11.8%. The credit growth limit in the first quarter assigned by the State Bank of Vietnam (SBV) to BIDV is 2.7 percent compared to 2019.

BIDV’s Net Interest Margin (NIM) is estimated to go up by only four basis points due to the pressure of capital mobilisation to reach a Lending to Deposits Ratio (LDR) of 85 percent and Tier-2 bond issuance to support the CAR.

The bank’s bad debt ratio is predicted to drop from 1.76 percent to 1.6%, the bad debt coverage ratio is expected to move sideways at 88 percent and the provisions for risks will fall by 10 percent compared to the same period of 2020, equivalent to 2.3 trillion dong.

 

Category: Finance, Vietnam

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