Awards for Excellence 2016
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It’s not ideal for your bank’s reputation when your founder is jailed for 30 years. That’s what happened to Asia Commercial Bank in June 2014 when Nguyen Duc Kien was found guilty of a host of crimes apparently conducted through several of the bank’s subsidiaries. Several other ACB executives were imprisoned too; the stock lost 38% of its value in a day.
Two years on, the transformation at ACB has been not only financial and reputational but physical. Visitors to the bank’s Ho Chi Minh City head office find it all but unrecognisable from a few years ago: it has been gutted and reshaped internally to make the place feel like a whole new bank.
More importantly, ACB is now stable and growing. Among the four joint stock banks it has the largest book of both deposits and loans, and while it is outgunned in profitability by some of its peers, net profits have grown steadily since the 2013 shock and were up 8.1% year on year in 2015. NPLs (in the 3-5 category in the Vietnamese system, the more severe end of exposure) are officially just 1.3% of total outstanding loans, the loan loss reserve has recovered to 87%, and the bank now offers an 8.2% return on equity.
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Tran Hung Huy, |
All of this is a consequence of an exhaustive restructuring plan, and one that’s very much still underway: during our review period the bank struck an agreement with the State Bank of Vietnam for a new roadmap to see it through 2018. Chairman Tran Hung Huy speaks of a balance between “our focus on resolving legacy issues and continued execution on the refreshed strategy.”
There is more to do. Bad loans of companies run by Kien still stood at D5.8 trillion ($257 million) on December 31 2015, and ACB general director Do Minh Toan says it will recover D2 trillion this year, while establishing a D1.5 trillion fund against provisional non-performing assets, most of it earmarked for Kien-related loans. But, relative to the bank’s asset base – D201 trillion at the end of 2015 – they are no longer debilitating, and the bank is clearly on the right track again.
