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Sacombank thrives in the reign of new chairman
Friday,  Sep 29, 2017,09:03 (GMT+7)

Sacombank thrives in the reign of new chairman

Sacombank’s business results for the first nine months of 2017 point to positive changes in the bank’s operations despite the post-merger restructuring. Almost all targets have been reached or exceeded, with a pre-tax profit already 87% greater than planned. Remarkably, its Q3 pre-tax profit was twice as high as the average of the preceding two quarters. In addition, bad debt settlement is now faster and more efficient. Thus, under the management of the new chairman, Duong Cong Minh, Sacombank’s operations have displayed signs of prosperity, laying the foundation for further development of business activities, gradual resolution of the remaining bottlenecks, and shortening of the post-merger restructuring.

Since the recent General Shareholders’ Meeting, Sacombank has been exposed to a lot of unfavorable information affecting its prestige and brand name. Nevertheless, with a strong foundation and admirable determination for business development, the bank’s market share has been enlarged as its total assets, fund mobilization and loan book increase. Specifically, as of September 21, the bank’s total assets had picked up 9.3% against the start of the year to nearly VND360 trillion, with significant improvement in the proportion of profitable assets (up 1.2% over the year’s beginning). Total capital mobilized had been more than VND330.7 trillion, a rise of 9.2% from early this year. The deposits of more than four million individual clients play a key role in the bank’s fund mobilization structure (10% greater than the beginning of 2017), making up nearly 89%. Notably, the bank carried out two rounds of issuance of long-term certificates of deposit in the first nine months to boost its Tier 2 capital and quickly attained its goals within a month, which indicates consumer confidence in the brand of Sacombank is increasingly sustainable.

Sacombank’s credit by September 21 had surged 13.4%, double the prior comparable period, amounting to nearly VND221 trillion. Specifically, more than 50% of the increase in its outstanding loans is attributed to the lending to the five preferred sectors. The bank’s credit structure by industry and term has been well controlled, evident in a gradually reduction in the proportion of loans for real estate and securities (down 0.3% from the year’s beginning), a much higher growth rate of short-term credit versus medium and long-term loans, and a 2.4% fall in the ratio of medium- and long-term loans against 2016. As a result, Sacombank’s net interest income has markedly improved, with a year-on-year rise of 48% achieved in the first nine months.

Furthermore, data on its service income in recent years suggest this activity at Sacombank is quite effective, occupying an increasing large share of its total income. Service revenue in the first nine months of this year was estimated at more than VND1.13 trillion, up 28% year-on-year, accounting for 22% of the bank’s total earnings, of which the gains from e-banking and card operations grew healthily, by a respective 40% and 32% over the same period last year. Sacombank has attracted nearly four million card users and 950,000 Internet banking clients, since the bank has always been a pioneer in developing advanced technologies with many e-banking and card services first deployed on the Vietnamese market. Most importantly, the tight security of Sacombank’s e-banking has been proven by periodical assessments by the international auditor Ernst & Young. With an aim to better address the diverse needs of clients, Sacombank will continue to develop towards digital banking in the future.

Remarkably, Sacombank this September signed an exclusive insurance agent contract with Dai-ichi Life Vietnam with a 20-year term, which is expected to produce a substantial stable income in the bank’s total service revenue. This would thereby build a solid and long-term financial foundation for the successful implementation of the banking restructuring scheme ratified by the central bank.

Sacombank informed its accumulated profit in the first nine months was beyond expectations. The stand-alone profit before tax was approximately VND900 billion, while the consolidated amount was put at VND1.1 trillion, or 87% higher than planned. Notably, its Q3 pre-tax profit was double the average of the preceding two quarters. ROA and ROE went up 0.3% and 4% respectively against the beginning of the year.

As for bad debt settlement, Sacombank wiped out VND6.7 trillion in the first eight months, recovered VND600 billion from the sale of impaired loans to VAMC and more than VND1.2 trillion from the liquidation of collateral. Receivables dropped by nearly VND2 trillion from early this year, demonstrating the gradual effect of the bank’s focus on debt recovery. A number of clients and partners are interested in acquiring some assets and large-scale projects, and have brought up this issue, the bank added. Sacombank is actively conducting negotiations over the price and will proceed to settlement, with the objective of radically handling VND20 trillion worth of bad debt/collateral by the year’s end, thereby recreating funds for profitable business operations.

With positive changes in its business operations and a new view of corporate governance, personnel, networks, business processes, risk management and brand development, the goal of earlier revival than planned and a cut in the time to deal with the remaining problems to 3-5 years that Sacombank strives for is perfectly plausible provided that macro-economic and banking conditions are favorable and stable.

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