Vietcombank says bad debt edges up to 1.4 percent in Q1

Friday, April 25, 2008
Vietcombank, Viet Nam’s third-largest lender, said Wednesday its overdue debt edged up to 1.4% of outstanding loans in the first quarter of this year, from less than 1.3% in the year-ago period.

The Hanoi-based bank, Viet Nam’s first state-run bank to float last December, said loans on March 31 rose 10% from the end of last year to VND105.56 trillion (US$6.6 billion).

The government has said it would reduce ownership gradually to 51% of stake in Vietcombank, which handles a quarter of Viet Nam’s total export and import payments.

Vietcombank did not give a reason for the higher overdue debt or provide its bad debt rate in the first quarter but said it made a net profit of 900 billion dong ($55.59 million), a statement on the central bank’s website (www.sbv.gov.vn) said.

Its total assets eased 0.3% from the end of 2007 to VND195.59 trillion ($12.13 billion) in March, the statement said without giving a comparative figure for profit in the first quarter of 2007.

Vietcombank Chairman Nguyen Hoa Binh said it was the first time in the bank’s 45 years of operation that the total assets declined.

The lender is set to list overseas in 2009

Global economic slowdown and rapid changes on domestic monetary markets has affected Vietcombank’s performance, Binh said at a news briefing Tuesday.

Vietcombank is due to hold its first shareholder meeting on Saturday in Hanoi.

The bank has said the meeting would discuss business targets for 2008, selection of a foreign strategic investor and also its domestic share listing.

Chairman Binh said Vietcombank would list shares on the country’s main exchange in Ho Chi Minh City in June while the actual debut date would depend on shareholders’ approval as well as approval from market regulators.

Vietcombank also planned to list overseas next year, Binh said without naming a specific market but Vietcombank officials have said the bank could list in Hong Kong or Singapore.

The lender has projected a credit growth of 30% this year, in line with a central bank’s 30% growth target for the entire banking industry as it moved to tighten money supply to control double-digit inflation.

Last year Viet Nam’s lending surged 54%.

Vietcombank expected its gross profit to rise 11.68% to VND3.38 trillion ($209 million) in 2008, it said in a report issued to shareholders ahead of the Saturday meeting.

The bank aims to cut bad debt to 2.6% of loans this year from 3.4% last year while its projected return-on-equity would ease to 15.71% from 16.95% in 2007, the report said.

Credit growth at banks and financial institutions in the Southeast Asian nation reached about 50 percent last year, according to the International Monetary Fund.

The government is prioritizing controlling inflation over economic growth.

Viet Nam may reduce this year’s target growth rate to around 7% instead of the 8.5-9% band set last year. (Reuters)