VietinBank: Loan growth comes with strict control of credit quality

According to data provided at the Q2/2024 Business Results Update Conference and data in the semi-annual financial report, VietinBank continues to affirm its position as a leading bank with high, substantial, and sustainable credit growth right from the beginning of 2024. In the first 6 months of 2024, VietinBank 's outstanding loans reached an impressive VND 1.57 million billion, equivalent to an increase of 6.7% compared to the end of 2023, higher than the industry average of 6%. The bank's credit growth is notable not only in terms of scale but also in terms of quality, characterized by a prudent risk management approach and a strategic focus on priority areas. Strategic drivers of credit growth VietinBank's strong credit growth is the result of a series of well-coordinated strategic initiatives. Regarding business planning and orientation, VietinBank has assigned annual plans to divisions/branches/subsidiaries early (November of the previous year). Accordingly, specific business orientations and action plans are developed and implemented early, throughout the headquarters and branches. Units are prepared, proactive, and determined to promote activities to ensure continuous growth from the beginning of the year; regular business meetings in regions are held to promptly resolve difficulties and obstacles and support branches.

Regarding general lending policy, VietinBank prioritizes credit growth in priority areas as directed by the Government, the State Bank of Vietnam, important and key domestic production and business sectors (electricity, telecommunications, electrical equipment, etc.), and provides environmentally friendly green credit. These are considered important areas for Vietnam's economic recovery and sustainable development. By focusing on these areas, VietinBank not only ensures its own financial health, but also contributes significantly to the overall economic picture of the country. At the same time, VietinBank focuses on building policies and loan product packages suitable for each customer segment, increasing cross-selling of products; in which, combining loan products with trade finance services, payments, financial management solutions, etc. helps customers save time, costs, and human resources. Regarding loan procedures, digitalization and data application: VietinBank has streamlined processes, forms, and standardized loan application documents to simplify credit granting procedures. Along with that, VietinBank has increased digitalization and applied technology to lending activities such as: applying Big Data, artificial intelligence in analyzing and researching customer needs, thereby having a basis for designing lending solutions for each segment; applying technology to the credit approval process to reduce costs (personnel, paperwork, travel time) for customers and thereby support customers to access capital faster. Digital transformation not only improves operational efficiency but also expands VietinBank's reach, allowing the bank to serve more customers, including those in remote areas. Regarding credit programs for customers and motivational programs for branches/staff, VietinBank focuses on understanding and meeting the growing needs of customers. The Bank has developed a series of innovative credit products suitable for each specific customer segment. This customer-centric approach has promoted loyalty and trust, leading to increased credit demand. Specifically, VietinBank deploys short-term and medium- and long-term credit packages suitable for each customer group (by industry, location, ensuring total benefits for VietinBank and customers...). In addition, VietinBank also has many programs to compete for loan growth/new customer development to motivate branches and sales departments. Risk management: The foundation of sustainable growth VietinBank's impressive credit growth is underpinned by a strong risk management system. The Bank has adopted a proactive approach to identify, assess and mitigate potential risks. Specifically, it includes strengthening portfolio screening and customer selection to increase outstanding loans: VietinBank has developed a credit orientation from the beginning of the year to identify effective industries, sectors and customer groups, and implemented strict credit appraisal processes to ensure that loans are only granted to borrowers with credit eligibility and a feasible business plan. This includes assessing the financial health, industry prospects and management capacity of the borrower. Strictly control debt quality, proactively identify industries/sectors/customers with difficulties/potential risks, to promptly take appropriate and practical support and resolution measures such as restructuring debt repayment terms, maintaining debt groups, and offering preferential interest rates, etc. to help customers stabilize operations and overcome difficulties soon; Risk management is implemented synchronously according to the 3-line protection model, focusing on modernization and application of information technology in the process of granting and managing credit. Improve and strongly develop tools and systems to support credit risk management such as early warning systems for credit risks, promptly identify customer risks to implement debt collection and settlement measures to minimize losses for the Bank. - VietinBank also aims to increase the bad debt coverage ratio, improve financial capacity, resilience to possible risks from the economy, and ensure the bad debt target assigned by the State Bank and the General Meeting of Shareholders. Challenges and opportunities Although VietinBank's credit growth in the first half of 2024 was impressive, the bank also faced a number of challenges and opportunities. Interest rates are unpredictable and under increasing pressure due to less abundant market credit demand and market liquidity, which has gradually warmed up since the end of the second quarter of 2024. The liquidity of the banking system when credit increases again may put pressure on deposit interest rates. In fact, banks also continuously adjusted interest rates upward in the second quarter of 2024. Inflation is forecast to be within the Government's target; exchange rate pressure may gradually cool down when the gap between VND and USD interest rates is narrowed and the State Bank of Vietnam takes actions to stabilize the foreign exchange market, thereby reducing the pressure to increase interest rates. In addition, the possibility of the FED reducing interest rates from September 2024 may also affect the development of Vietnam's interest rate level. Global economic uncertainty, the global economic outlook remains uncertain, with concerns about geopolitical tensions and disruptions to global supply chains. These uncertainties are likely to impact Vietnam’s export-oriented industries and reduce credit demand, which could negatively impact businesses’ ability to repay bank loans. Pressure from digital transformation as the pace of technological change accelerates presents both challenges and opportunities for VietinBank. The Bank must continuously innovate to stay ahead of the curve and meet the evolving needs of its customers. VietinBank’s credit growth in the first half of 2024 is a testament to the Bank’s strategic vision, prudent risk management, and customer-centric approach. VietinBank’s focus on priority sectors, compliance with government support policies, and digital transformation all contributed to the Bank’s impressive performance. Although there are still challenges, with its inherent position, VietinBank will continue its growth trajectory and play an important role in Vietnam's economic development. Source: https://vov.vn/doanh-nghiep/vietinbank-tang-truong-du-no-di-kem-voi-kiem-soat-chat-che-chat-luong-tin-dung-post1118744.vov