Vietcombank reported 20% rise in pre-tax profit in H1
Bank saw healthy growth across all parts of business following revamp
HO CHI MINH CITY -- Joint Stock Commercial Bank for Foreign Trade of Vietnam, better known as Vietcombank, posted more than 5 trillion dong ($220 million) in pre-tax profit during the first half of 2017, up 20% year-on-year, achieving 53.2% of its full year target.
The positive result was supported by healthy growth from all sectors after a three-year restructure, said Vietcombank's General Director Pham Quang Dung at a meeting last week to review the bank's performance.
During January-June, the bank set aside 3 trillion dong for risky loans, bringing its provision fund to 10.7 trillion dong, equal to 136% of its total non-performing loans.
The bank's capital mobilization increased 10.4% to 660 trillion dong, while its credit growth rose to more than 534 trillion dong, or 13.1%, achieving 95.7% of the full year target of 15% credit growth.
State Bank of Vietnam, the central bank, set credit growth for the country's banking sector at 18% this year, but Vietcombank was capped at 16%. The head of Vietcombank has asked the central bank to allow its credit growth limit to be the same as the sector in 2017. Analysts have estimated credit growth at Vietcombank will be around 17% this year.
Vietcombank is also waiting for approval to increase its charter capital, expand its network, as well as open a subsidiary in Laos -- its third overseas launch after opening branches in Hong Kong and the U.S.
The bank is targeting a dividend of 8% this year, as well as bad debts below 2% and a total asset expansion of 11% to 874 trillion dong.
Vietcombank shares closed at 38,300 dong ($1.68) apiece on Tuesday, an increase of 0.52% from the previous session, and topped the banking sector on the Ho Chi Minh City Stock Exchange during the January to June period.
During the first half, a number of Vietcombank senior executives have been appointed to other local banks, to help reform weak financial institutions.
Vietcombank on Monday joined a group of four big banks cutting interest rates to clients in priority sectors, including high-tech agriculture, export and supporting industries, small and medium enterprises and high-tech companies.
The cut followed a move by Vietnam's central bank on Monday to cut the refinancing rate by 25 basis points, and to cut some local lending rates for priority sectors by 50 basis points "on the basis of having assessed slow inflation", in order to enable banks to provide more accessible loans to enterprises.
Annual consumer price inflation in June was 2.5%, the slowest pace since last July.
The interest rate cuts are expected to boost economic growth in the second half of 2017, fulfilling the nation's 6.7% gross domestic product growth target. Its economic growth rate stood at 5.73% during January to June.
Vietnam's move came days after the International Monetary Fund said the country should keep its monetary policy stable, as it was still suffering from the fallout of a 2011 banking crisis.
The IMF has lowered its 2017 forecast for Vietnam's GDP growth to 6.3% from an estimate of 6.5% in May.