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Home / Economy / Banking & Finance
Vietcombank breaks Vietnam’s pre-tax profit record
Ngoc Thuy 08:30, 2018/01/18
Vietcombank’s consolidated pre-tax profit in 2017 reached VND11 trillion (US$485 million), a sharp increase of 32.9% over the last year and 16% higher than the target, making it the most profitable bank in the Vietnamese banking sector.
As the bank with the largest market capitalization, Vietcombank’s stock price hit a record of VND58,000 (US$2.5) on January 12, bringing the bank’s market capitalization to VND155 trillion (US$6.8 billion).
 
Vietcombank is the most profitable bank in Vietnam.
Vietcombank is the most profitable bank in Vietnam.
At the end of 2017, the bank’s total capital was estimated at VND890 trillion (US$39 million), up 38.7% year-on-year and achieving 118% of the 2017 target, according to the bank’s year-end meeting on January 12 to prepare its targets for 2018. Notably, the growth rate of capital mobilization in the wholesale and retail sector was 19.6% and 21.9%, respectively.

Besides, the lender’s outstanding loans were reported at VND553 trillion (US$24.3 billion), rising by 17.2% against last year. Vietcombank is gradually shifting its investment focus away from wholesale and towards the retail sector. 

The bank’s bad debt ratio was kept at 1.11%, a reduction of 0.35 percentage points compared to 2016, which is the lowest rate among Vietnam’s credit institutions. Vietcombank’s return on average assets (ROAA) and return on average equity (ROAE) was reported at 0.98% and 17.78%, respectively, while its net interest margin (NIM) increased by 2.47%. 

Vietcombank is the first commercial bank to have issued a specific roadmap on the reduction of lending rates, following Prime Minister Nguyen Xuan Phuc’s request for an additional reduction of 0.5% on January 9. Specifically, short-term VND-denominated loans for priority sectors will be reduced to the maximum lending rate of 6% per year, while the loan rate of 6.5% previously set for already standing loans will also be reduced to 6% per year.

In an unrelated move, the governor of State Bank of Vietnam (SBV) has given permission for Vietcombank to sell shares to foreign investors in a private placement. The deal, which is expected to take place in the first few months of 2018, will invigorate the market, said Vietcombank’s Chairman of the Board of Directors, Nghiem Xuan Thanh. 

Last week, the Prime Minister has approved Vietcombank’s plan to open its first branch office in Laos, representing an initial charter capital of US$80 million. 

Following the bank’s restructuring plan until 2020 approved by SBV’s governor, Vietcombank set the target to become the leading bank in risk management in Vietnam, making it on the lists of the top 100 banks in Asia and the top 300 financial corporations on the world. 

At present, Japan’s Mizuho Corporate Bank (MHCB) is the largest strategic shareholder of Vietcombank, holding 15% of the bank’s charter capital (347.6 million shares). With the US$567.3-million deal signed in 2011, MHBC was one of the first Japanese companies to invest in the Vietnamese banking sector.

Vietcombank is one of the most successful investments of MHBC, said Yasuhiro Sato, CEO of the Japanese bank. The initial investment of US$567.3 million has doubled its value since 2011, according to the bank. 
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