A transaction office of Vietinbank. The State Bank of Viet Nam wants Vietinbank and Vietcombank to become the leading banks of the country. — Photo vnexpress.net

SBV Governor Nguyen Van Binh made the announcement at a Vietinbank meeting on January 23, adding that this is part of a restructuring scheme for the domestic banking system. "This is a difficult task," he told the local press.

Binh said the central bank needs Vietinbank to actively take part in the general process of handling weak lenders, by providing assistance related to human resources, management experience and prestige.

He specified that the industry and trade bank can combine efforts by merging with a smaller bank, and any merger will not financially hurt it, but will promptly help it expand its network.

The governor had expressed a similar viewpoint during a Vietcombank meeting a week earlier, when he confirmed that the foreign trade lender was set to merge with Saigonbank as part of a systematic reform process.

Vietinbank General Director Le Duc Tho said the bank will follow SBV's policies. "This is an opportunity for the market, as well as a necessary condition for reorganising and enhancing the overall management capacity of the banking system…We are likely to face many issues that the system is required to deal with."

With regards to market speculations that Vietinbank will merge with PGBank, he said related issues are being processed and information will be publicised at a suitable time. Unless Vietinbank makes an official announcement about this, everything will just be considered a rumour, he noted.

Tho reported on January 23 that Vietinbank had fulfilled its pre-tax profit target of VND7.3 trillion (US$347.62 million) last year, with asset values totalling VND660 trillion ($31.43 billion) on December 31, up 14.6 per cent from the previous year.

In 2014, its total outstanding loans touched VND544 trillion ($25.90 billion), reflecting a year-on-year jump of 18.2 per cent, with bad debts representing 0.89 per cent of the amount. The total deposits were pegged at VND596 trillion ($28.38 billion), rising 16.4 per cent, from a year ago.

The bank aims to maintain last year's profit growth this year as well and expects its total assets to increase by at least 15 per cent. It has projected deposit and loan growth at 13 to 15 per cent, with the non-performing loan ratio expected to be less than 3 per cent.

Vietcombank Chairman Nghiem Xuan Thanh reported on January 16 that the bank had earned VND5.68 trillion ($270.48 million) in pre-tax profits last year, up 2 per cent from the previous year.

In 2014, deposits at the bank grew by nearly 26 per cent and outstanding loans expanded by nearly 18 per cent year-on-year, while the bad debt ratio falling by 0.4 per cent year-on-year to 2.29 per cent.

SBV officials said about six merger and acquisition (M&A) deals will take place this year and mentioned the possible adoption of strong measures, such as dissolutions, bankruptcies and compulsory M&As for reinvigorating the banking system's health. — VNS