RETAIL BANKING | Cesar Tordesillas, Vietnam

Vietinbank gains VND4.4T profit before tax in Jan-Aug

VietinBank-CTG gained 87% of the year's profit plan based on its recently released report on performance for the first eight months of this year.


The banks gained a profit before tax of 4.434 trillion dong, or 87% of the year’s target of 5.1 trillion dong, for the period of january to August on account of improved gross profit margin and strong credit growth .

The bank’s credit growth in Jan-Aug reached 16%. Its net interest income contributed 70% to CTG’s profit in the period. The bank continued to focus on production sector, with 38% of the bank’s total outstanding loans; commerce, with 21% of the total; and households with 22% of the total. The bank’s loans for financial services accounted for only 0.12% of the bank’s total outstanding loans.

The bank also posted stable capital source in Jan-Aug, including capital from refinance channel from the State Bank of Vietnam and stable savings from state-owned enterprises making up 30% to the bank’s total deposits.

In 2011, CTG targets to reach 450 trillion dong in total assets, up 22% year on year. Till the end of August, CTG posted total assets of 425 trillion dong. Though the bank’s remaining room for credit growth in the remaining months of this year is not big, CTG still can reach its target of total assets at 450 trillion dong by the end of this year. Especially, CTG is speeding up the issuance of $500 million worth of international bond to support its assets growth.

CTG expects to increase its assets to 550 trillion dong ($26 billion) by the end of 2012, up 22% from 2011 and it would be $60 billion by 2015. The lender also expects to scale up its chartered capital to $4 billion by 2015. By the end of 2011, CTG expected to hike its chartered capital to 23.8 trillion dong from 16.858 trillion dong in the end of last year. Accordingly, 3.372 trillion dong will be raised from share issuance to the existing shareholders and 3.57 trillion dong will be mobilized from offering shares to the second strategic partner, or 15% stake after the share issue.

The bank’s bad debt ratio is still under control at 1.2% by the end of August against 0.66% by the end of 2010. Currently, the bank’s loan for Vietnam National Shipbuilding Industry Group (Vinashin) is worth 900 billion dong, mainly for subsidiaries of Vinashin and these companies are operating profitably. Therefore, CTG can fully reclaim the principal and interest from these loans. Presently, Vietinbank’s provision fund can completely offset the bank’s bad debts.

Vietinbank’s capital adequacy ratio (CAR) increased to 9.82% as of June 30, 2011 against 8.02% by the end of 2010. CTG is striving to increase its CAR by issuing additional stake to the second strategic partner namely Nova Scotia Bank or its plan to issue $500 million worth of international bonds, which is scheduled by the end of this year.

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