Resolving difficulties with customers, OCB increases risk provisions, reduces profits, ensures operations

Orient Commercial Joint Stock Bank (OCB, stock code: OCB) has just announced its audited consolidated financial statements for 2023. Accordingly, pre-tax profit reached VND 4,139 billion. Compared to the management report, OCB's pre-tax profit decreased by VND 1,088 billion due to an increase in provision expenses of VND 501 billion and adjustments to some income items actually collected from customers in 2023 to be accounted for in 2024. According to the data in the audit report, OCB's total assets at the end of 2023 were VND 240,114 billion, of which outstanding debt from market 1 reached VND 148,005 billion. The bad debt ratio was recorded at 2.02%, demonstrating OCB 's stable asset quality during the recent economic turmoil. Explaining the difference before and after the audit, OCB said it had proactively set aside additional provision costs to increase the credit risk reserve fund buffer.

In recent years, the domestic economy has faced many difficulties due to the impact of the COVID-19 pandemic, declining import demand from international markets as well as geopolitical tensions in the world. This has caused many businesses to fall into difficult situations, workers have lost their income, thereby affecting customers' ability to repay debts. With the desire to accompany and support customers to overcome difficulties, OCB has proactively and persistently implemented the instructions of the Government and the State Bank such as reducing existing loan interest rates, restructuring debt repayment terms and regularly launching preferential programs, credit packages of thousands of billions of VND with low interest rates. In addition, OCB has continuously implemented many advanced risk management measures and synchronous and consistent bad debt handling measures to ensure the quality of credit assets, including solutions that allow customers to use collateral to hand over to the bank to replace debt repayment obligations, in order to shorten processing time and reduce the burden of interest and related fees for customers compared to implementing debt settlement measures through normal litigation. In addition, OCB still supports terms for customers to be given priority to buy back their assets at the appropriate time when there is a need and income difficulties have been improved. According to OCB, although the method of receiving collateral to replace debt repayment obligations is permitted by law, the implementation is lacking in consistency and synchronization between localities and relevant agencies due to problems in the registration and updating of changes on land use rights certificates and assets attached to land. Accordingly, there are still many conflicting views on the accounting of related loans from many sides, even though the customer's debt obligation is determined to have ended upon completion of the handover of collateral. On that basis, along with the principle of prudence in management, OCB has proactively set aside additional provisions for debts that have been handed over collateral. OCB's leaders also added that the adjustment of some income items actually collected from customers in 2023 will be completed and recorded in this first quarter. At the same time, the debts of customers who have handed over collateral to replace debt repayment obligations, up to now, the bank has processed a reduction of more than 50%, so the provision costs that have been set aside for these assets at the end of 2023 will also be refunded accordingly. Thereby, it is expected that the business results in the first quarter of 2024 will certainly improve significantly. It can be seen that in the current context of high bad debt, OCB has proactively increased provisions and sought ways to resolve difficulties for customers. Although it will affect the bank's profits, this will also help OCB manage risks effectively and have a solid foundation to better support customers. At the same time, the bank always strictly adheres to the limits and safety ratios in operations, and controls risks well throughout 2023. OCB has also just announced the documents for the 2024 Annual General Meeting of Shareholders, aiming to increase charter capital by VND 4,168 billion, of which it is expected to issue shares to pay dividends to existing shareholders at a rate of 20%. If successful, OCB's charter capital in 2024 will increase to VND 24,717 billion. In addition, the bank also presented this year's business plan to the congress, with the target of total assets increasing by 19%, pre-tax profit reaching VND6,885 billion, up 66% compared to 2023. The meeting will be held on the morning of April 15 in Ho Chi Minh City. Source: https://daibieunhandan.vn/kinh-te-xa-hoi/thao-go-kho-khan-cung-khach-hang-ocb-tang-du-phong-rui-ro-giam-loi-nhuan-bao-dam-hoat-dong--i364221/