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Sacombank has solved more than VND19 trillion bad debts
Hai Ly
Friday,  Jan 5, 2018,16:41 (GMT+7)

Sacombank has solved more than VND19 trillion bad debts

Hai Ly

Mr. Duong Cong Minh

Following is an interview with Duong Cong Minh, Chairman of Sacombank, over how to deal with bad debts. Regarding Tram Be’s involvement in the Vietnam Construction Bank case, he says:

- Relevant authorities confirmed that Sacombank did not incur losses from the lending activity as the loans were secured. Sacombank fully recovered the principal and interest.  We already provided the information to stakeholders in the most transparent way, so customers can trust us.

In the second half of 2017, Sacombank’s board solved a significant workload, most importantly the consolidation of sizeable bad debts and asset backlog valued at more than VND19 trillion.

The Saigon Times: Sacombank’s leadership committed to handling VND15-20 trillion in bad debts by the end of 2017. How’s it going so far?

- We wasted no time to tackle the bank’s problems by implementing a range of measures. We worked against the clock to handle bad debts. Of VND19 trillion consolidated, VND2.8 trillion liquidated from foreclosed assets, VND2.6 trillion toxic loans sold at market price and VND14 trillion recovered from bad debts and receivables. In particular, soured loans totaled more than VND15 trillion as indicated in the Government-approved restructuring scheme.

In December 2017, Sacombank announced auction of three assets in Duc Hoa III Industrial Park, Long An Province at the starting price of nearly VND9 trillion. They are million-dollar real estate assets. Has Sacombank recovered a significant part of problem loans?

- We have contemplated the scenarios to make sure the auctioning process was carried out as planned and Sacombank can yield the best results. For your information, these properties were evaluated as highly-liquid assets by investors as the fact that, it is not easy to have the land use rights in such large concentrated areas in the southern key economic zone. These assets were believed to be a very promising investment portfolio to investors.

Besides the sale of high value collaterals, Sacombank also concentrates on liquidation of moderate valued debts once we have opportunities. Sacombank is selling a portfolio including loans of a few billion to hundreds of billions of Vietnam dong secured by stocks and real estates. Currently, our debt settlement division is racing against time to review the watch-list of problem loans and receivables, choose one that we can sell to recover on a daily and weekly basis.

Being one of six local commercial banks, Sacombank worked with VAMC to implement Resolution No. 42 to speed up bad debt settlement. Does the collaboration happen as you expect?  

- Having signed up the mutual agreement, Sacombank and VAMC worked straightaway on evaluating loans planned on selling to VAMC at market value to generate cash flow to support business activities. As mentioned above, Sacombank liquidated VND19 trillion in bad debts, we sold VND2.6 trillion assets to VAMC. In addition, we list publicly all trouble assets such as real estate, machines and vehicles in HCMC, Hanoi and other provinces on the bank’s website, so all potential buyers can purchase what they want.

Could you say something about the bank’s debt settlement plan in 2018?

- I think we have learned a lot from the results of 2017. We are going to revise bad debt settlement policies and procedures, which will be aligned with Sacombank‘s current situation. Nevertheless, the most important task is to execute the bank’s restructuring scheme. Sacombank is facing the challenges unlike other banks, which is the consequence of the merger. This is burdensome and time-consuming.

In the scheme, the Government and the State Bank of Vietnam have approved our projected legacy assets resolution in 10 years. Nevertheless, regulators said that Sacombank’s current position underpinning the projection completed within 5-7 years was not sufficiently ambitious, and that strong message was passed on to thousands of staff so that we can stay focused on this performance-driven factor in 3-5 years. 

The bad loan resolution process is expected to be not lower than 2017’s result. Another important thing to get the resolution up to the plan relies on volatilities of property market, financial market and other economic indicators. However, this must be done through our efforts, where the roadmap is being developed to address issues and help Sacombank revert to a very credible and attractive one.

According to the current requirement, the maximum threshold for NPL ratio is 3%. In your opinion, how long does it take Sacombank to bring down its NPL ratio to the level?

- At the beginning of 2017, our NPL ratio was 6.68%, now it stood at 4.28% and we expect to rein in soured debts at 3% in 2018.

Sacombank has solved a lot of legacy issues, but it does not seem enough. Does the bank find a new path for growth?

-  Our healthy retail banking business is continuously expanding in terms of quantity and quality. Customer service and marketing sales, being our main areas, are upgraded through product innovations and service enhancements. As a result, the customer base increased by 4.3 million or 20.6% on the prior year.

We recorded strong growth on our single balance sheet with total assets reaching VND364 trillion, an increase of 10.7% on the prior year; total deposits increased 11.4% to VND323 trillion; outstanding loans increased 12.6% to VND219 trillion. Especially, the profitability performance improved when total income increased 33% on the prior year to VND8.2 trillion, strong support to the bad debt settlement. Non-interest income reached VND2.4 trillion in 2017, in which traditional fee income increased by 29.6% on the prior year. Until now, Sacombank is one of the leading banks with the extensive network of 566 branches and transaction offices.

From entrepreneur and investor perspective, you recently continued to raise your stake in Sacombank. Do you stake great sums of money on Sacombank?

- I am holding a 3.32% interest in Sacombank. I and my relatives own 7.47% of Sacombank. I am going to step down from the post of chairman at Him Lam Group in order to comply with the new regulation, and spend more time on Sacombank. I also would like to raise my stake in Sacombank in the future legally.

Honestly speaking, I have my confidence in Sacombank. Joining us at the 26th anniversary gala dinner, Governor of the State Bank of Vietnam Le Minh Hung share his thought: “Do not look at the rearview mirror. We cannot change our past, yet the present and future we can definitely do better and move forward, for all banks and for Sacombank.” The way he puts it helps us uphold self-confidence in a concrete way.  
From your point of view, what would be the challenge for Sacombank in 2018?

- We acknowledge that we are here to deal with bad debt management, which would never be so easy, and more challenging to handle the formation of new non-performing assets. At the same time, we are turning the bank around by building a transparent culture and moving forward to Basel II compliance, reducing cross-ownership, diversifying composition of shareholders, cutting expenses to yield the best outcomes to the shareholders. We appreciate what Mr. Nguyen Thien Nhan, Secretary of the HCMC Party Committee, said at the 26th anniversary celebration: "Remember that you can do whatever you want with your money but when you keep hundreds of trillions of Vietnam dong of other people, that will be a heavy burden and you must have a strong sense of responsibility for that."

That is what Sacombank’s new leadership always bears in mind.

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