The bank’s current charter capital is over 37 trillion. According to Nghiem Xuan Thanh, despite successful private placement for foreign investors with a total value of 6.18 trillion in 2018, compared to the plan, the demand for capital increase of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) is still large.
At the Conference on implementing Vietnam’s banking industry development strategy on April 11, Nghiem Xuan Thanh, Vietcombank’s Chair, said that Vietcombank has developed VCB restructuring plan in association with handling bad debt by 2020 and it is the first group of banks approved by the Governor of the State Bank of Vietnam (SBV) under the Decision No. 02/ QD-NHNN dated 8/1/2018.
Shortly thereafter, Vietcombank issued a detailed plan, which established a vision until 2020 that Vietcombank was the No. 1 bank in Vietnam, one of the 100 largest banks in Asia, one of the world’s 300 largest bank and financial corporations managed according to international practice.
Over the past years, Vietcombank’s business has grown dramatically, shifting towards sustainability. The quality of assets is actually controlled, the bad debt ratio is below one percent, the financial capacity is enhanced, the profitability rate is sharply increased and the safety ratios are ensured.
The bank leader said that Vietcombank’s strategy until 2025 and orientation in 2030 defined the business focus on three pillars, namely service, retail and capital business investment. The bank will increase the proportion of non-credit income on total income (focus on services); actively increase revenue from services from new products and services associated with digital banking. Vietcombank will also convert the digital bank, aiming to become the leading bank in the digital transformation system and apply digital banking services, which is the e-government bank.
To achieve the above objectives, Vietcombank has proposed to the government and the SBV some contents.
In particular, the issue of raising capital, According to Nghiem Xuan Thanh, state-owned commercial (SOCBs) banks are lacking of capital, and Vietcombank, despite its successful private placement of foreign investors with a total value of 6.18 trillion in 2018, compared with the proposed plan. Therefore, the need to raise capital of VCB in the near future is quite large.
“In the context of international integration, the capital increase of SOCBs has become a serious and urgent issue,” Thanh said.
Accordingly, Vietcombank proposed to the government to create conditions for commercial banks with state capital to raise capital by retaining profits such as allowing dividends in shares, allowing capital to be increased from surplus sources and retained earnings.
In addition, the government proposed to increase the ownership rate for foreign investors in commercial banks, allowing the use of a part of the Arrangement Support Fund of State owned enterprises to raise capital for SOCBs, meeting the minimum safety capital according to Basel II.
Regarding the promotion of electronic payment, Vietcombank proposed the government to consider allowing this bank as a pilot bank to coordinate with the government Office to study and build non-cash payment solutions based on the applied foundation of using information technology on the national public service portal for citizens and organisations.
At the end of 2018, Vietcombank’s total assets reached 1.072 quadrillion dong, of which total outstanding loans reached 640.314 trillion dong, charter capital was 35.978 trillion dong.
The bank said it wanted to increase its charter capital to 57.201 trillion dong by 2020, ie an average growth of 10.5 percent annually. Total assets by 2020 are expected to exceed 1.3 quadrillion dong; capital mobilisation exceeded one quadrillion; credit outstanding up to 870.6 trillion.
