In a recently published report, Viet Capital Securities Company (VCSC) said that Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank, stock code: CTG) has received approval of shareholders to stop paying dividends in cahs to retain profit as Tier-1 capital.
Previously, at the 2019 Annual Shareholders Meeting held in April, VietinBank’s Chair Le Duc Tho said that by the end of 2018, the bank’s separate Captial Adequacy Ratio (CAR) was 9.6 percent and consolidated CAR was 10 percent. However, if based on Circular 41, the CAR of VietinBank is below eight percent.
According to VCSC’s assessment, VietinBank can hardly to pump capital in the next 12 months, and this affects the bank’s growth prospect.
“VietinBank still lacks of foreign ownership room, and it is still unclear when and how the bank’s foreign ownership room is adjusted. We forecast that VietinBank’s CAR in 2019 will decline to 9.8 percent with a thin ratio of Tier-1 capital of 6.8 percent,” mentioned VCSC’s report.
VCSC said that VietinBank is unlikely to carry out the Basel II standards.
VCSC also assessed that the handling of the bonds of Vietnam Asset Management Company (VAMC) will affect the bank’s profitability in the coming years.
VietinBank currently still has 13.4 trillion dong of VAMC bonds on its balance sheet. Assuming that the bank will fully provision for this amount of bonds, the related credit costs are forecasted to strongly rise in 2020.
