Pre-tax profits of Vietcombank and VietinBank, two large banks with majority State ownership, rose slightly in 2012 despite tough challenges facing the banking industry.
Vietcombank obtained a consolidated profit of some VND5.7 trillion in 2012 while VietinBank achieved about VND8.21 trillion as of the end of last month.
Vietcombank in 2011 enjoyed a consolidated pre-tax profit of roughly VND5.69 trillion and the bank got approval from its shareholders to raise the 2012 profit to VND6.55 trillion. Despite the lender failed to realize its profit target, the slight increase in 2012 manifested the bank’s strong efforts
Similarly, VietinBank in 2011 pocketed approximately VND8.39 trillion in pre-tax profits that were yet to be consolidated. The lender’s shareholders after that agreed upon the target of VND9 trillion in profits for the year 2012.
“As a bank with majority State holdings, we are supposed to take proactive actions to carry out duties assigned by the Government,” said Le Thi Hoa, board member of Vietcombank.
Conforming to the Government’s policy, Vietcombank had sharply cut interest rates two times in 2012, and such rate cuts sent the bank’s profit down by around VND1.2 trillion, Hoa told the Daily. However, she noted, Vietcombank had also extracted a big risk provision, at nearly VND3.1 trillion, thus making its balance sheet healthier.
Meanwhile, an executive of VietinBank said total assets of the bank grew some 7% according to the 2012 initial business result. VietinBank’s credit growth was put at 13-15% in 2012 and its bad debt ratio was less than 1.5% of total outstanding loans, with profits rising 0.7% year-on-year, the executive said.
VietinBank will pay dividend by shares at a rate of 13-15%, the banker said. “We set the same 2013 targets for total assets and total capital sources, at growth of 15%, while the credit growth target is fixed at 20% and the ratio of bad debts at below 2%,” he added.
VietinBank last year finalized a merger and acquisition (M&A) deal with the highest value in Vietnam so far when selling 20% equity to the Bank of Tokyo-Mitsubishi UFJ Ltd with a total value of VND15.46 trillion or US$743 million. The foreign capital contribution helped push VietinBank’s equity capital up by a staggering 45% in late 2012 but it also pulled the return-on-equity ratio down to 12.4% from 17.8% at the same time.
After the deal, the book value of VietinBank shares coded CTG is expected to surge from VND13,209 to VND15,202 each and its capital adequacy ratio (CAR) is predicted to jump to over 17% from a mere 12%.
The Saigon Times Daily