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Vietinbank to sell 20% to partner
The Bank for Industry and Trade of Viet Nam (Vietinbank) plans to sell 20 per cent of its shares to a strategic partner in the third or fourth quarter of this year, said Pham Huy Hung, the bank's chairman, at an analysts' meeting yesterday in Ha Noi.
Hung said: "The bank's shares are now below their real value and priced reasonably at between VND30,000 to VND40,000 (US$1.4-$1.9) each."
The chairman said that by late April, the bank's profits stood at VND2 trillion ($95.2 million) and its capital adequacy ratio (CAR) was 11 per cent. The bad debt ratio meanwhile stood at 2 per cent, which Hung said Vietinbank (CTG) was hoping to reduce to 1 per cent by the end of the year.
Vietinbank successfully raised $250 million from an international five-year bond sale with a yield of 8 per cent – a high rate, Hung said.
However, he said investors were still concerned about the economic climate, and the country's credit rating was low. The successful international bond issue was a good sign. Meanwhile, he said a number of solid financial institutions had been forced to raise annual interest rates to between 9-10 per cent.
Although interest rates in US dollars for short-term deposits stand at 2 per cent, it was difficult to mobilise funds for medium- and long-term deposits. That was why Vietinbank decided to issue international bonds to help stabilise domestic foreign currency levels, he added.
The bonds were issued in Europe, Asia and the US, following Government approval in February.
Regarding non-productive loans, the Vietinbank chairman said lending levels in the real estate sector stood at 3.6 per cent, while securities investment rates stood at 0.13 per cent.
When asked about the bank's mergers and acquisitions, Hung said the bank would consider the move, which is in line with a State Bank of Viet Nam directive. However, he said the bank had to ensure shares were appropriatly valued before making a specific decision.
The selling and buying of shares is part of the State's roadmap to divest capital in the bank. State capital would be reduced from 60 per cent to 51 per cent, as instructed by the Prime Minister, the chairman said.
By the first quarter of this year, the bank's total assets stood at VND406 trillion ($19.3 billion), a year-on-year rise of 28 per cent. Meanwhile, its after-tax profits reached VND1.3 trillion, 60 per cent up on the same period last year.
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