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CTG's bad debts hit international levels
The bad debt ratio of Vietnam Joint Stock Commercial Bank for Industrial and Trade - Vietinbank (HoSE: CTG) reached international standards as its total assets rose to VND450 trillion (US21.6 billion), an increase of 25 per cent, said bank chairman Pham Huy Hung on CTG's Analyst Day yesterday in Ha Noi.
Participants focused aggressively on tackling the bank's bad debt in the first eight months of this year, concerns which stemmed from the news that many large banks have recently raised their bad debt provisions. Hung said the bad debt ratio of CTG stood at 1.2 per cent at the end of August.
The chairman of the bank's board of directors actively urged its subsidiaries to reduce bad debt levels by the end of this year to below 1 per cent.
When asked about the lowered credit ratings of some banks by international organisations such as Moody's and Credit Suisse, Hung noted that those agencies had their own foundations and standards that did not entirely align with domestic goals. Vietnamese banks should see the assessment as a positive result so as to improve their service quality and risk management.
Hung also said that the bank's provision was two times larger than its bad debt, and that bank leaders would conduct three scrutiny reviews in the next three months with a view toward minimising bad debt.
CTG has actively handled outstanding debt from the loans of the Viet Nam National Shipbuilding Group (Vinashin) in order to lower the rate of bad loans in the first six months. After settling the debt from Vinashin, CTG has refunded provisions of this loan.
The bank's credit growth in the first eight months was 12.5 per cent, and the rate of loans for non-production sectors was only 8 per cent lower than stipulated by the central bank.
The bank's pre-tax profit is estimated to reach more than VND5 trillion ($240 million) and shareholders will receive a dividend payment of 20 per cent. The bank also plans to increase its charter capital to VND26-27 trillion ($1.2-1.3 billion) by the year's end.
CTG has now negotiated to sell 15 per cent of its stake to the Canadian Bank of Nova Scotia, a deal that Hung believes can be completed early next year. After its completion, the State shareholder will own a 65 per cent stake in CTG.
In the 2015 plan, CTG will continue to open branches in other markets like Malaysia, Indonesia, China and the US.
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