SSI: Vietcombank’s profit may fall sharply in the end of the year

18-Sep-2020 Intellasia | VnExpress | 6:02 AM Print This Post

The latest report on Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) by Saigon Securities Incorporation Research (SSI Research) has lowered its profit forecast for this year and 2021. Accordingly, in the new forecast, Vietcombank’s profit is expected to reach 20.060 trillion dong this year and 23.470 trillion dong in 2020, down by respectively 9.5 percent and 10.3 percent compared to the previous forecast. The bank’s profit forecast is 13 percent less than 2019.

According to the research team, the adjustments due to the second Covid-19 pandemic outbreak were made earlier than expected. As the asset quality of Vietcombank has been negatively affected by the pandemic, SSI predicted that the bank would strengthen the provisions for credit risks. Therefore, the bank’s pre-tax profit in the second half of the year was estimated to reach only nine trillion dong, down by more than 23 percent over the same period of last year.

The Net Interest Margin (NIM) will fall by 0.22 percent compared to the first half of the year. Analysts stated that the NIM decline due to the increase in restructured outstanding loans and the new bad debts although home loans increase strongly. Vietcombank’s NIM in 2021 may increase again, reflecting the recovery of credit after the Covid-19.

On the positive sign, the income from the exclusive bancassurance contract is expected to supplement 1.9 trillion dong to the bank’s pre-tax profit this year. However, based on the outstanding loans and cautious provisioning policy, SSI estimated that Vietcombank’s provisioning expenses in the second half of the year to still double over the same period.

Previously at the annual general meeting held in the end of June, Vietcombank’s leaders did not disclose the business plan for this year and said they would update it based on the approval of the State Bank of Vietnam (SBV). At the beginning of the year, the bank once mentioned that its pre-tax profit growth target is about 10%, reaching 25.4 trillion dong.

By the end of the second quarter, Vietcombank still took the lead in the industry in terms of profit the position that the bank has been holding for many years. Nevertheless, compared to 2019, the difference between Vietcombank and its followers has been narrowed when the bank’s profit in the first half of the year declined by three percent over the same period, reaching nearly 11 trillion dong.


Category: Finance, Vietnam

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