At the end of 2018, besides banks announcing big profits and double-digit growth, there are still many banks to report lower profits or to adjust the last minute business plan to meet the target.
However, in 2019, the market may witness a return to the “race track” of many banks after a year of “missed rhythm”.
This prospect is set after most of the members have shaped the plans and objectives of the year in the last annual general meeting of shareholders.
Being in the group of profitable banks in 2018, LienViet Post Joint Stock Commercial Bank (Lienviet Post Bank) has prepared for a spectacular reversal this year.
Talking to BizLIVE reporter, Nguyen Dinh Thang, the bank chair, said that in the beginning of 2018, LienVietPostBank initially set up a profit plan based on the credit growth of 20 percent, equivalent to 2017. However, this indicator that the State Bank of Vietnam (SBV) assigned was not as expected.
Besides, the bank also found a good opportunity to develop the network, which requires increasing investment in infrastructure, facilities and staffing.
In addition, the bank also needs to invest in the construction of advanced technology infrastructure, administration, management applications, as well as investment in digital banking.
Accordingly, the Bank’s Board of directors agreed on LienVietPostBank’s strategy to focus investment resources to build a solid foundation for the bank to develop safely, sustainably and effectively in the following years.
Therefore, at the end of 2018, the bank only achieved pre-tax profit of 1.213 trillion dong, down 31.4 percent compared to 2017. Compared to the profit target of 1.2 trillion dong (adjusted down 600 billion dong in mid-August), the bank has just completed the year plan.
However, this year, with a planned profit of 1.9 trillion dong, LienVietPostBank is one of the rare banks to set profit growth of more than 50 percent over the previous year.
Talking about the quite ambitious profit target, Thang said, the bank’s Board of directors had made a detailed plan and could be confident to complete.
“This year, the pressure will be lighter than 2018 because the upgraded technology system is ready for network expansion. On the other hand, the Post Office transaction offices upgraded in 2017 and 2018 began profitable business in 2019.
Accordingly, the target of 1.9 trillion in pre-tax profit in 2019 is completely grounded to achieve, “said LienVietPostBank Chair.
According to the bank’s leader, it is studying to build a number of LienVietPostBank’s own credit schemes for developing rural credit loans, consumer loans to limit shadow banking based on the network’s strength and digital banking.
On that basis, if approved by SBV, the credit growth threshold can increase to carry out the government’s policy, and the business plan and profit will be better accordingly.
Meanwhile, the operational risks related to the scandals, in which hundreds of billions of customers’ deposits lost, made the profit of 2018 of Vietnam Joint Stock Export Import Bank (Eximbank) plummeted, reaching only 827 billion dong, equivalent to a decrease of 19 percent compared to 2017.
Eximbank’s leadership even judged that this was the year that the bank faced many unprecedented difficulties and challenges in the history of development. However, in 2019, Eximbank also planned to return to the trillion-dong “club”.
Specifically, this year, the bank expects to mobilise capital of 143.5 trillion dong, up 21 percent compared to 2018. Credit outstanding loans increased by 11 percent to 115.57 trillion dong, but in favourable conditions, Eximbank will propose to SBV for the approval of credit growth limit increase.
Eximbank expects a pre-tax profit to make provision for additional Vietnam Assets Management Company (VAMC) bonds of two trillion dong, up 49 percent from the previous year. Profit before tax after provision of 1.077 trillion dong, up 30 percent compared to the results achieved in 2018.
According to the bank’s management, in 2019, Eximbank focused on mobilising capital from the market one. Focusing on mobilising demand deposits (CASA) from a large customer segment for potential areas. Deploying mobilised policies and products towards small and medium-sized customers to ensure capital stability.
The bank also advocated to accelerate the progress of handling outstanding debts, focusing on handling debts sold to VAMC, aiming to buy back all debts sold to VAMC by 2020 according to the restructuring orientation of SBV.
At the present time, Eximbank has not yet successfully organised the 2019 general Meeting of Shareholders because it has not found a common voice among the groups of shareholders.
However, shareholders expect, all activities of the bank will return to the right trajectory when these conflicts are resolved and Eximbank will find the glory for a while.
As for Saigon-Hanoi Joint Stock Commercial Bank (SHB), even though the profit in 2018 did not fall like the decline of the two banks above, it almost only stalled.
The main reason is that profit from service activities decreased by half (to 714 billion dong) while operating expenses increased by nearly 23 percent, making net profit of only 3.519 trillion dong, down 7.7 percent compared to the same period. However, thanks to the reduction in provisioning to 24.6 percent, at the end of 2018, SHB recorded a profit before tax of 2.094 trillion dong, a slight increase of 8.8 percent.
However, this year, SHB has also planned to accelerate strongly with the target charter capital increasing by 5.534 trillion dong to 17.571 trillion dong; total assets reach 372.917 trillion dong; capital mobilisation reach 283.922 trillion dong, up 16.64 percent; credit outstanding climb to 261.592 trillion dong, up 13 percent.
Notably, SHB has the direction of accelerating on the “race track” this year, when setting the target pre-tax profit of 3.068 trillion dong, up to 46.5 percent compared to 2018.
Maritime Joint Stock Commercial Bank (MSB) is another case when in 2018, the bank recorded a profit of over one trillion dong, up to 6.6 times the result achieved in 2017, the highest level in seven years.
This year, MSB continues to expect profits to reach a new level of 1.86 trillion dong, an increase of 77 percent compared to the previous year. MSB is also one of the banks setting the strongest profit growth this year.
MSB management said that the bank would continue its strategy of shifting to retails, strengthening services, instead of relying mainly on credit. This direction is safe and minimising the risk of credit which is often associated with bad debt.
In addition, MSB will keep investing in large resources and strongly implementing the technology system for digital utilities. Digital bank is MSB’s next strategic shift point of view.
Also this year, MSB is expected to list MSB shares on the Hochiminh Stock Exchange (HOSE) in the third quarter. This is considered the next step to help banks expand scale and transparency in operations.
According to the experts, the bank’s profit in 2019 may not be as strong as the previous year when the credit growth limit of the whole industry is limited to 14 percent, while the bad debt and the potential bad debt are still quite large.
This is also the reason most banks are quite cautious when making business plans for this year.
However, as above, there are many cases towards high profit growth targets. And this year’s “race” is expected to be more dramatic with the rise of mid-range banking groups.
