The Hanoitimes - The future sale of 600 million shares to KEB Hana, if successful, will have a big positive impact on BIDV’s financial picture by improving its credit and profit growth potential.
State-run Bank for Investment and Development of Vietnam (BIDV)'s pre-tax profit in 2018 is projected to reach VND9.58 trillion (US$412.36 million), fulfilling 103.1% of the entire year guidance and up 8.2% year-on-year, according to Viet Dragon Securities Company (VDSC).
The the nine months through September 30, BIDV posted its pre-tax profit of VND7.25 trillion (US$312.07 million), reaching 78% of its full year projection. The lender targeted its pre-tax profit in 2018 to reach VND9.3 trillion (US$399 million).
VDSC expected that the bank’s net interest margin (NIM) in 2018 will reach 2.87%, a bit lower than 2.94% in 2017, leading to a 14.1% increase in net interest income. Additionally, it is projected that non-interest income will grow by 14.5%, reaching VND9.22 trillion (US$396.87 million).
The bank is forecast to book VND17.71 trillion (US$762.31 million) as loss provision expenses in total for 2018, amongst which VND2.5 trillion or US$107.61 million will be spent on Vietnam Asset Management Company (VAMC) bonds.
As of September 30, BIDV’s consolidated customer loan balance was more than VND968 trillion (US$41.66 billion), up 11.8% year-on-year.
The lender’s pure loan-to-deposit ratio (LDR) improved to 96.6% compared to 94.0% recorded at the third quarter of 2017. As one of the banks with reasonable credit growth rate in the first six months of 2018, BIDV still has room to grow its lending in the last quarter in spite of the State Bank of Vietnam (SBV)’s affirmation of not adjusting credit growth limit in the second half of this year, stated VDSC.
In the third quarter of 2018, BIDV only wrote off VND117 billion (US$5.03 million) of bad debts, much below the amount of VND10 trillion (US$430.44 million) in the first two quarters. As a result, loss provision expenses fell year-on-year and declined compared to the first two quarters, even though the percentage of the total operating income was still the highest amongst banks in VDSC’s coverage list.
Meanwhile the non-performing loan (NPL) ratio increased from 1.5% by end of the second quarter to 1.8%, getting closer to the bank’s highest allowed level of less than 2%.
VDSC estimated that in the first nine months of 2018, BIDV just booked VND880 billion (US$37.87 million) as provision for VND9,266 trillion (US$398.59 million) of the net value of VAMC bonds.
On October 30, BIDV submitted a proposal to shareholders seeking approval for the private placement of more than 600 million shares to Korean bank KEB Hana, expected in 2018 or 2019. This is a positive signal regarding BIDV’s attempt to improve its financial operation and raise the capital adequacy ratio (CAR) to satisfy Basel II requirements, according to VDSC.
The brokerage added that this placement, if successful, will have a big positive impact on BIDV’s financial picture by improving its credit and profit growth potential.
BIDV is one of Vietnam's four major government-run commercial banks. It staged its initial public offering (IPO) in 2011 and listed its shares on the Ho Chi Minh City Stock Exchange in 2012.