Vietnam Commercial Joint Stock Export Import Bank, which trades EIB shares on the Hochiminh Stock Exchange (HOSE), has set ambitious goals for 2023, with plans to increase its total assets by 13.5% to VND210 trillion and pretax profit by 34.5% to VND5 trillion.

The bank also aims to increase its cash deposits by 11% to VND165 trillion and outstanding debt by 12.3% to VND146.6 trillion.

In 2022, the bank outperformed its targets, thanks to a sharp reduction in its bond portfolio and a focus on lending to businesses and consumers.

The bank’s asset value increased 11.6% to VND185 trillion, cash deposits rose to VND148.6 trillion, and before-tax profit more than doubled to VND3.7 trillion, exceeding its full-year target by 48%.

On March 20, the EIB stock dropped by 4.09% to VND18,750, its second consecutive losing session, while the VN-Index on the southern bourse fell 2.11% to 1,023.1, with 369 decliners and 48 advancers.

The HOSE saw over 567.3 million shares worth VND9.7 trillion traded, with block deals accounting for around 91 million shares worth over VND1.7 trillion.

The Hanoi Stock Exchange’s HNX-Index also closed down 1.39%, with 51 winners and 127 losers, and over 54.5 million shares worth VND800 billion traded.

The most active stock of the day was HPG, with nearly 23 million shares changing hands.

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Source: Vietnam Insider

That many enterprises will be subject to inspection regarding their previous stages of flotation or divestment of State capital sparks concerns among investors. This could be another source of pressure on the stock market, which is already in a sensitive and very vulnerable state.

Check on flotation and divestment

Development Investment Construction Joint Stock Corporation, or DIC Group, saw its stock’s price sink to the floor during the two sessions on March 1 and 3 regarding the news that this group would face a comprehensive inspection of how they previously conducted flotation and State capital divestment. From February 21 to March 3, DIG lost more than 23% of its value.

At a meeting on February 27, Dang Cong Huan, deputy inspector general of the Government Inspectorate, announced a decision to inspect the group’s legal compliance during the flotation process and State capital divestment.

In another development, on February 27, the Government Inspectorate published its conclusion following the check on Vietnam Sport Joint Stock Company (Vinasport) under the Ministry of Culture, Sports, and Tourism. The inspection authority duly provided the Ministry of Public Security with all the necessary information on the seven cases of major violations by this company, which had damaged State property. For the violations during the flotation process at Vinasport, the Government Inspector pointed out the responsibility that the Ministry of Culture, Sports, and Tourism officials must take on.

Later, on March 3, the Government Inspectorate made public their conclusion regarding a similar investigation into Waterway Transport Corporation (now Waterway Transport Joint Stock Corporation), revealing a series of wrongdoings in flotation and divestment of State capital here. In particular, dossiers of the two cases of improper flotation and divestment were already sent to the Ministry of Public Security for verification.

In late 2022, the Ministry of Public Security called for a prosecution against seven individuals in the case known as “breach of regulations on management and use of State assets, causing loss and waste,” which took place at Civil Engineering Construction Joint Stock Corporation No. 1 (or Cienco 1 for short). It was then concluded that the misconduct during the flotation of Cienco 1 had cost the State more than VND230 billion.

In response to the news about their inspection, DIC Group, apart from providing additional information on their roadmap for flotation and divestment of State capital in 2017, informed the current policy of the State is to review all activities related to flotation and State capital divestment at State-owned enterprises in the past. For this reason, DIC Group and many other firms are also subject to inspection by the Government Inspectorate. This is a regular activity of the Government Inspectorate and State management agencies, especially in the current context.

Are investors concerned?

Facing this situation, quite a few investors feel concerned that enterprises will be subject to inspection concerning their previous stages of flotation or divestment of State capital. This could be another source of pressure on the stock market, which is already in a sensitive and very vulnerable state.

It should be acknowledged that the progress of flotation and divestment of State capital in recent years moved at a snail’s space, with the set targets for each year often unattainable. Not only is the number of enterprises subject to flotation modest, but the degree of flotation at each one is also minimal, as the State remains the dominant shareholder. Notably, many enterprises that have completed the flotation process have not yet been listed on a stock exchange, making their performance not much improved.

Those obstacles and hardships impeding the progress of flotation and divestment of State capital have been much discussed. They range from the mindset and perception of the State economy playing the leading role, the privileges that State-owned enterprises are granted to the inconsistent mechanisms and policies, the unfavorable market conditions, the lack of guidelines for corporate valuation, etc.

Furthermore, the leadership of State-owned enterprises is not keen on speeding up flotation and State capital divestment for fear of losing their positions when their companies become joint-stock. They also find the risks of such a process discouraging since they may later get inspected and accused of selling cheap State property.

Besides those irresponsible corporate leaders and those having cold feet, there are still competent ones who have taken advantage of the policy to take over the shares of other enterprises during the flotation process and State capital divestment at a price much lower than the real one. This has caused a significant loss of revenue for the State budget.

The major loss of State assets during flotation is land since State-owned enterprises are given access to quite a few pieces of land of great value at highly desirable locations. However, when land use purposes get converted during the flotation process, the new land prices after recalculations do not meet the market levels. Therefore, the Ministry of Finance late last year proposed studying and amending the legal regulations on flotation in the coming time, with special attention paid to the calculation of realty values during this process.

Back to the policy of stepping up inspection related to flotation and divestment of State capital, this may be aimed at preventing the State budget from suffering revenue loss. That said, it may also affect the progress of flotation and State capital divestment soon, making this activity, which is already slow-moving, even more sluggish.

It should be reminded that the annual divestment of State capital is one of the important catalysts for the stock market, more or less a driving force that props up the market when information is insufficient. Many investors have made a fortune by timely swing trading at those listed companies where State capital is further disengaged, attracting a massive cash inflow.

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Source: Vietnam Insider

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Source: Vietnam Insider

The Vietnam News Agency has reported that the State Bank of Vietnam, the country’s central bank, has taken punitive measures against several of the 11 commercial banks that were inspected for issues related to investments in corporate bonds.

Following snap inspections into the banks’ investments in corporate bonds, the central bank has aimed to ensure compliance with the law and reduce the banks’ exposure to risks. The central bank has not disclosed the names of the banks that violated the regulations.

According to current regulations, banks are prohibited from purchasing corporate bonds and are not allowed to sell the bonds to their subsidiaries.

In the previous year, the central bank conducted 1,420 inspections, with 385 of them being unannounced.

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Source: Vietnam Insider

Making the sale of insurance transparent and managing the quality of consulting during this process are the key to ensuring the long-term sustainable development of bancassurance—the distribution of insurance products via banks.

A “gold mine” called insurance

2022 was another “bumper” year for quite a few banks regarding the revenue from insurance premiums. Following the earnings season in the fourth quarter of last year, the ranking of banks based on their earnings in the insurance segment has been determined.

Military Commercial Joint Stock Bank (MB) again occupies the highest position. The bank has reported a pre-tax profit of over VND18.15 trillion for 2022, up 37% against the preceding year. Its insurance business and services revenue alone reached more than VND10.18 trillion, nearly VND1.8 trillion higher than in 2021. The gains from the insurance made up 71.5% of the bank’s total revenue from general services. It is noteworthy that MB’s insurance revenue has snowballed in recent years, from just VND4.2 trillion in 2019 to nearly VND5.85 trillion in 2020 and then over VND10 trillion last year. Such impressive achievement is attributed to the fact that MB currently owns two subsidiaries active in the insurance sector, Military Insurance Corporation (MIC) and MB Ageas Life Insurance Company Limited.

The next one on the list is Vietnam Prosperity Joint Stock Commercial Bank (VPBank), with a profit after tax of some VND16.92 trillion, a surge of more than 47% from 2021. The insurance segment brought in nearly VND3.35 trillion for VPBank last year, up 42% year-on-year. The bank’s insurance revenue accounted for 32% of its total service income, equivalent to the result in 2021. In March 2022, VPBank and AIA Vietnam Life Insurance Company Limited renewed their exclusive cooperation agreement on bancassurance with a term of 15 years.

According to the estimate of prepaid charges based on many recent deals, Yuanta Securities thought VPBank could renegotiate the exclusive distribution of insurance for a share of VND8 trillion. As announced by VPBank, since such an agreement was signed for the first time in 2017, it has always been among the group of banks with the highest life insurance sales and is currently ranked third in the market. In November 2022, VPBank completed another capital acquisition and thus is now holding a 98% stake in OPES Insurance Joint Stock Company (specializing in non-life insurance products).

The third largest bank when it comes to insurance revenue is Vietnam Technological and Commercial Joint Stock Bank (Techcombank). In 2022, the bank earned a profit after tax of over VND20.43 trillion, of which the income from its joint insurance services made up more than VND1.75 trillion, a rise of 12.3% against the preceding year. At present, together with its partner Manulife, Techcombank is running a program combining investment with insurance.

The next entry is Vietnam International Commercial Joint Stock Bank (VIB), whose commissions from the sale of insurance amounted to more than VND1.3 trillion, up nearly 9% from 2021. VIB is now a distribution channel for Prudential’s insurance products.

In fifth place is Tien Phong Commercial Joint Stock Bank (TPBank), with VND876 billion yielded by insurance sales and consulting, a slight fall of 8% compared to one year before. This is a rare case of a bank whose revenue in the insurance segment went down. TPBank is currently offering the products of Manulife and Sun Life.

Many others are among the top banks with big gains from insurance premiums, including VietinBank, BIDV, Sacombank, HDBank, and OCB. In the case of VietinBank, the bank, and Manulife, in late January 2022, announced a 16-year exclusive partnership with an upfront fee of around US$30 million, payable over six years. It is estimated that in the first quarter of last year alone, VietinBank registered some US$5 million in the prepaid premiums of bancassurance.

At a more modest level, small banks only obtained tens of billions of dong from insurance, but their growth rates are truly remarkable. For example, Petrolimex Group Commercial Joint Stock Bank (PG Bank) last year made a total of VND33 billion from its insurance operations, a quantum leap of more than 310% from 2021.

Towards sustainable development

Although the potentials of bancassurance are great, promising a lot of revenue and profit for banks in the future, there have recently been quite a few cases related to the distribution of insurance products via the banking system, sparking mixed public opinions. Specifically, it has been reported that many customers are required to take out bank loans as part of their insurance policies. In late 2022, when banks were running out of “room” for credit growth, many borrowers claimed they were asked to buy an insurance package equivalent to a certain percentage of the value of the loans.

In response to such complaints, the State Bank of Vietnam (SBV), on February 21, 2023, asked credit institutions to prevent their staff/affiliated units from forcing their clients to buy insurance in any form. This is to protect the legitimate rights and interests of customers using financial and banking services and to ensure that credit institutions strictly comply with the provisions of the law. As per the central bank’s statement, “in case their employees/units are found to have coerced customers into buying insurance, credit institutions will have to take full responsibility before the law for such a practice.”

Notably, leaders of the Banking Supervision Agency and the Insurance Supervision Authority said they would set up a joint hotline to receive and promptly handle all complaints and recommendations by citizens, agencies, and businesses related to providing insurance services at credit institutions. In short, banks may only encourage their customers to participate in an insurance scheme voluntarily, not compelling them or using this as a condition for loan disbursement.

With the aggressive intervention and coordination between the Ministry of Finance and the SBV, one can hope the practice of obliging customers to buy insurance will soon come to an end. However, this is far from simple since the interests of banks are directly involved. Even so, with regard to the common interests of the whole society, especially those who have transactions with banks, it is essential that the sale of insurance should be made transparent and the quality of consulting during this process properly managed to ensure the long-term sustainable development of bancassurance.

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Source: Vietnam Insider

SeABank (Vietnam) achieved pre-tax profit of nearly US$ 111.5 million after 9 months of 2021.

After 9 months of 2021, Southeast Asia Commercial Joint Stock Bank (SeABank, HoSE: SSB) witnessed impressive performance with a consolidated pre-tax profit of nearly US$ 111.5 million, increasing by 124% year-over-year and completed 105% of its 2021’s budget. The Bank was also recognized as one of the “Best Companies to Work for in Asia 2021.”

Accordingly, SeABank’s Total Assets reached US$ 8,706 billion, up by 18%; Outstanding loans to customers reached US$ 4,959 billion, up by 15%; Net profit from interest reached US$ 169.6 million, an increase of 85% year-over-year; Net Income from services increased sharply to US$ 35.82 million, up by 181%; Fee income reached USD 49.6 million, up by 194% year-over-year; the CIR stood at 35.35%; the NPL ratio continued to decrease to 1.68%. Given the COVID-19 pandemic’s complicated developments, SeABank has proactively taken effective measures against the pandemic while adjusting its business plan flexibly, focusing on developing online products and SeAMobile digital banking application, thereby, the Bank’s number of online transaction in 2021 has increased by 191% compared its 2020 data.

Besides, in October 2021, SeABank was proud to be named the “Best Companies to Work for in Asia 2021” by HR Asia – the leading magazine on human resources in Asia. The survey was conducted by HR Asia with a sample population of 30,000 employees from 581 enterprises in Vietnam, using TEAM (Total Engagement Assessment Model) criteria, including: Collective Organization for Real Engagement (Core), Heart, Mind & Soul (Self) and Think, Feel & Do (Group), in which, SeABank scored highly in all three factors: 4.40 (average score: 3.74), 4.70 (average score: 3.88) and 4.74 (average score: 3.96) respectively.

According to HR Asia’s assessment, SeABank is one of the few banks that meets all the criteria and well maintains the factors related to the working environment and employee benefits such as flexible working environment; facilities that offer convenience and enable creativity; policies that encourage and motivate employees; leaders who take employees’ opinions into consideration, trust and defend them; the bank places people above profit; the bank has welfare funds and works for the community, etc.

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Source: Vietnam Insider

With Covid-19 still affecting many countries, Vietnam is not yet ready to open up to international tourists, PM Nguyen Xuan Phuc said Wednesday.

The top priority for the government is protecting people’s health, he said at a government meeting in Hanoi.

Phuc ordered relevant agencies to not let a second wave of coronavirus break out in Vietnam and safeguard the outstanding performance of the country in the fight against the pandemic.

Related: Cambodia has re-opened its borders with Vietnam

Vietnam has gone over two months without community transmission.

The country is not yet ready to welcome back foreign tourists since some Asian countries like China and South Korea have been struggling with a second wave and the global situation has not improved.

The government would carefully assess the regional and international situations to decide when to resume international flights, the premier stated.

Earlier this month in a document the government said that Tokyo, Seoul, mainland China’s Guangzhou City, Taiwan and Laos could be among destinations being considered for resumption of flights.

Vietnam Airlines and Bamboo Airways have announced plans to resume international operations to destinations in South Korea, Taiwan, Japan, and mainland China from July 1, and are awaiting official approval.

But many experts have warned these plans are impossible to achieve given the fresh outbreaks in Asia and that talks with other countries on lifting travel bans are still on.

At the meeting on Wednesday the PM said recruiters could send Vietnamese guest workers abroad if they are accepted by the recipient countries.

He ordered relevant agencies to make clear and facilitate procedures for foreign experts, investors and high-skilled workers to enter Vietnam with “suitable forms of quarantine”.

Vietnam has suspended all international flights since March 25 and banned entry of foreign nationals since March 22 except for special cases.

The country’s Covid-19 tally is 352 by Thursday morning, and the number of active cases is 23 as the rest have recovered after treatment. The latest cases are those repatriated and quarantined upon arrival.

The novel coronavirus has claimed 479,000 lives in 212 countries and territories.

China’s capital of Beijing with more than 20 million people reported its first case in the latest wave on June 11, with over 200 so far confirmed positive for the virus. Beijing is facing a second wave of Covid-19, linked to the Xinfadi wholesale market, a food distribution center in the city.

Reporting by Viet Tuan, Nguyen Quy @ VNExpress