Banks beset by long-term accumulated losses

For the past 19 months, the Ho Chi Minh City Stock Exchange (HoSE) has been listing Vietnam Export and Import Commercial Bank (Eximbank) as “security subject to special monitoring” due to the bank’s accumulated loss of VND118 billion ($5.1 million).

Eximbank's shares have been under special alert since April 2016

Specifically, according to Eximbank’s consolidated financial statement for the first three quarters, the bank achieved a net profit of VND602 billion ($26.4 million), down 16 per cent against the same period last year. This brought a net profit of VND80 billion ($3.5 million), a 1.2 per cent decrease on-year.

In the third quarter of 2017, although the bank downsized general provisions by 13 per cent, from VND262 to VND 228 billion ($11.5 to $10 million), Eximbank obtained a modest pre-tax profit of nearly VND60 billion ($2.6 million), signifying a plunge of 50 per cent on-year.

Additionally, over the last three quarters, Eximbank’s accumulated pre-tax profit was VND457 billion ($20.06 million), 24 per cent less than the bank’s 2017 target.

Previously, in 2015, the State Bank of Vietnam (SBV) uncovered business performance-related fraud at Eximland (Eximbank’s real estate development arm). Eximland borrowed funds from Eximbank to purchase real estate from Eximbank itself, artificially boosting Eximbank’s income to around VND1 trillion ($43.9 million).

To boot, Eximbank’s unresolved accumulated losses have a negative effect on the liquidity of the EIB stock. As of December 4, EIB plummeted to VND12,450 ($0.54), a 15.93 per cent fall compared to the ticker’s price at the date of listing.

Another bank struggling with a long-term weak financial performance is Vietbank with an accumulated loss of approximately VND189 billion ($8.2 million), despite its positive business results over the past nine months. The bank’s pre-tax profit was VND73.4 billion ($3.2 million), the double of its 2017 annual target.

According to the financial institution’s official announcement regarding the handling of its non-performing loans, between 2013 and 2016, Vietbank was recorded to have accumulated a deficit of VND200 billion ($8.7 million).

Earlier, Vietbank had postponed the registration of the security deposit twice, which lessened the likelihood of the bank completing its listing on UPCoM by the end of 2017.

Apart from Eximbank and Vietbank, massive accumulated deficits also appeared on the financial statements of three other financial institutions, including Vietnam Construction Bank (CB Bank), OceanBank, and Global Petroleum Bank (GP Bank), along with an increasing negative amount of owner’s equity also affecting the three banks.

The financial performance of three aforementioned financial institutions was among the primary concerns raised in the State Audit’s report on measures to prevent and combat criminal activities, submitted to the National Assembly (NA) earlier this year.

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