Vietnam's top listed bank BIDV looking for steady profit in 2017

By Ho Binh Minh   April 24, 2017 | 03:45 pm GMT+7

The Hanoi-based bank forecasts lending this year to rise by 16 percent, below the 18-percent annual increase in 2016.

BIDV, Vietnam's biggest listed bank by assets, has targeted a gross profit of VND7.75 trillion dong ($342 million) this year, nearly unchanged from 2016, while it projects slightly slower credit growth.

vietnams-top-listed-bank-bidv-looking-for-steady-profit-in-2017

BIDV executives pose for a photo during a shareholder meeting on April 22. The bank has targeted a steady profit for 2017, while annual lending could slow to 16 percent from 18 percent last year. Photo handout by BIDV

The Hanoi-based bank, formally known as the Bank for Investment and Development of Vietnam, wants to boost lending this year by 16 percent, slowing from the 18-percent annual increase in 2016, it said in a statement after shareholders approved the bank's annual business targets last Saturday. Going by market capitalization, BIDV is the country's second biggest listed bank after Vietcombank.

BIDV's credit growth target is below the 18-percent annual target set by the central bank for the entire banking sector as the Southeast Asian nation seeks to quicken its economic expansion to 6.7 percent. The Asian Development Bank forecasts Vietnam's growth at 6.5 percent in 2017, while the World Bank projects it at 6.3 percent. 

Vietnam has one of the world's fastest growing economies, expanding at around 6 percent annually in the 2011-2015 period after jumping 7 percent per year in the previous five years.

Last year, gross domestic product advanced 6.21 percent from 2015, the first slowdown since 2012, due to dry weather, an environmental disaster and unfavorable economic conditions.

BIDV, which controlled a 13.6-percent share of Vietnam's credit market last year, plans to keep its bad debts below 3 percent in 2017.

In 2016, the bank's bad debt ratio rose to 1.95 percent from 1.68 percent at the end of the previous year, while it set aside VND9.2 trillion for the provision fund, a jump of nearly 60 percent from 2015.

This year, BIDV will raise at least VND1.03 trillion from selling a 3 percent stake to foreign and Vietnamese investors, and use the proceeds to raise its registered capital. It will also look further for foreign strategic investors, the bank said in another statement.

Unlike a dozen banks in Vietnam, BIDV does not have any strategic foreign investors, but a BIDV executive said the lender is very much willing to welcome such investors, the central bank-run Banking Times newspaper reported on Monday. 

BIDV is cooperating with a Japanese partner and has established a venture with the bank, Chief Executive Officer Phan Duc Tu told shareholders at the meeting, according to Banking Times.

Earlier in April, BIDV said Vietnam's central bank has licensed the BIDV-SuMi Trust Financial Leasing Co to start operating in the country. BIDV holds 51 percent of the joint vanture, while the Sumitomo Mitsui Trust Bank has the remaining 49 percent.

In July 2015, a BIDV executive said the bank may sell a 15-20 percent stake to a long-term foreign investor in the banking sector, and 10 percent to another overseas investor, while keeping state ownership at 65 percent, Reuters reported.

However, the sale did not take place last year.

The Vietnamese government has kept the cap on foreign ownership in domestic banks unchanged at 30 percent, even though it said in April 2015 it would raise the ceiling to get more support from foreign banks to restructure Vietnam's banking sector.

BIDV shares ended down 1.2 percent at VND16,350 on Monday.

 
 
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