Stock value of state-owned banks rise to VND568.940 trillion

30-Oct-2020 Intellasia | VnEconomy | 6:02 AM Print This Post

In the report on the health of banks that the government submitted to the National Assembly, there were statistics on the system of state-owned banks.

State-owned banks include Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) and Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank).

In 2019, the issue of improving financial capacity was a major focus of the entire group of state-owned banks. Since their capital raising plans have not been approved, that has affected the growth prospect of banks as well as increased the pressure to increase capital costs due to the implementation of measures to offset the need of improving financial capacity such as issuing secondary bonds and increasing medium and long-term deposits. Therefore, the structure of outstanding loans has changed very positively by currency and term. The credit structure is focused on priority areas encouraged by the government and the segments with high profitability.

Bad debts decline, stock value sharply rises to 568.940 trillion dong.

According to the audited consolidated report, by the end of 2019, liabilities and equity (total capital) of state-owned banks reached 5,405,766 trillion dong, up by 572.136,6 trillion dong (11.8%) compared to the previous year. The structure of mobilised capital shifted towards raising the proportion of capital mobilised from economic organisations and residents, issuance of valuable papers; and reducing deposits and loans to other credit institutions and debts to the government and the State Bank of Vietnam (SBV).

Specifically, the debts to the government and the SBV were 313.881 trillion dong, up by 4.778 trillion dong (1.5%); customer deposits were 4,204.772 trillion dong, up by 483.748 trillion dong (13%) compared to the end of 2018.

As of late 2019, the outstanding loans to customers were recorded tat 3,910.379 trillion dong, up by 418.406 trillion dong, up by 12 percent compared to the end of 2018. Credit quality was ensured, with bad debts in 2019 reaching 53.654 trillion dong, accounting for 1.37 percent of the total lending to customers, down by 0.2 percent compared to the end of 2018.

Regarding investment activities, by the end of 2019, the total balance of investment securities and trading securities of state-owned banks was 568.940 trillion dong (excluding risk provisions), up by 20.398 trillion dong (.371%) compared to the previous year.

In particular, the trading securities were 12.333 trillion dong, up by 5.536 trillion dong (81.5%), and investment securities were 556.607 trillion dong, up by 14.861 trillion dong (2.7%) compared to the end of 2018.

Regarding asset quality, the government’s report mentioned that the outstanding debt group 2 of state-owned banks were 66.520 trillion dong, accounting for 1.7 percent of the total outstanding loans, up by 1.002 trillion dong (1.5%) compared to the end of 2018. The total bad debts (debt groups 3,4 and 5) were 53.654 trillion dong, down by 1.163 trillion dong (negative 2.1%) compared to the end of 2018. The ratio of bad debts on total outstanding loans stood at 1.37%.

By the end of 2019, the total balance of restructured debts and debts of which the debt groups were maintained as regulated reached 6.750 trillion dong, down by 9.837 trillion dong compared to the end of 2018, in which state-owned banks gradually lowered the balance of restructured debts and debts of which the debt groups were maintained (reduction of 8.559 trillion dong in VietinBank, 962.3 billion dong in Agribank and 315 billion dong in Vietcombank)

According to banks’ reports on investments and receivables that are difficult to be recovered by the end of 2019, Agribank recorded 903 billion dong in the balance of receivables that are difficult to be recovered with no secured assets, up by 563.8 billion dong compared to late 2018.

The total bad debts of state-owned banks settled in 2019 were 62.862,4 trillion dong, down by 28.368 trillion dong (31.09%); in which the use of risk provisions in 2019 was 44.995 trillion dong, down by 14.061 trillion dong (negative 23.8%) compared to the end of 2018.

In 2019, state-owned banks set aside 56.669 trillion dong for risk provisions, exceeding the target assigned by the SBV on setting risk provisions in banks’ 2019 business plan.

Significant revenue and profit increase

In 2019, state-owned banks attained a total income of 437.408 trillion dong, up by 60.507 trillion dong (16%) compared to 2018.

The group’s after-tax profit was 47.798 trillion dong, up by 14.649 trillion dong (44.2%) compared to the same period of 2018. Accordingly, the Return on Equity ratio (ROE) by the end of 2019 was 15.66%, and Return on Assets ratio (ROA) was 0.88%.

In 2019, three out of four banks made divestments in six businesses and organisations other than credit institutions, collecting a total of 985.3 billion dong (BIDV with 2.3 billion dong, Vietcombank with 95.9 billion dong and VietinBank with 887.1 billion dong.

“The State investment continued to be preserved and profitable. The equity recorded an increase of 26 percent compared to the end of 2018, in which the charter capital rose by 7.263 trillion dong (5.3%) compared to late 2018,” stated in the government’s report.

Regarding the capital increase for state-owned banks, the government’s report said that with the current financial situation and the need for equity capital to meet the minimum capital adequacy ratio as prescribed, raising charter capital for state-owned banks is very urgent, especially in the near future, when banks apply Basel II standards according to Circular 41 and meet the standards of international rating agencies in order to keep the current credit ratings.

 

Category: Finance, Vietnam

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