Analysts suggest that Sacombank’s strong business performance in 2023 was due to the completion of provisions.
Specifically, Sacombank’s pre-tax profit for Q4 and the full year 2023 recorded significant growth, reaching VND 2,755 billion (up 45%) and VND 9,595 billion (up 51%) respectively, thanks to a sharp reduction in provisioning costs.
For the full year 2023, net interest income increased by 29%, and the net interest margin (NIM) continued its upward trend, reaching 3.8% (an increase of 0.4 percentage points compared to last year, thanks to a high return on earning assets of 9.6%). As such, Sacombank is one of the few banks that expanded its NIM in 2023.
Meanwhile, total operating income remained flat compared to 2022, reaching VND 26,173 billion, due to a decline in service income.
The non-performing loan ratio as of December 31, 2023 stood at 2.28%, slightly higher than the 2.20% at the end of Q3 2023, and Sacombank has increased its provisioning buffer further during the year.
In terms of profit prospects for 2024, Agriseco Research believes that Sacombank will continue to maintain its growth momentum with several key drivers.
Firstly, Agriseco Research expects Sacombank to achieve higher credit growth (after completing provisions for remaining non-performing assets in 2023) in the context of a more positive macroeconomic recovery.
Secondly, after completing financial obligations under the Restructuring Plan in 2023, Sacombank will expedite the auction of 32.5% stake in VAMC (Bad Debt Resolution Agency) according to the schedule, with the earliest completion in Q2 2024.
Thirdly, the successful auction of Phong Phu Industrial Park will help Sacombank increase its profitable assets and create a high growth potential in the coming period.
Earlier in early 2023, Sacombank organized an auction of 18 debt secured by assets in the Phong Phu Industrial Park. This is the fifth time Sacombank has auctioned off these debts, with a starting price of VND 7,934 billion. According to Sacombank, the total value of the debts as of December 31, 2021 is VND 16,196 billion, of which the outstanding principal is over VND 5,134 billion and the accrued interest is over VND 11,061 billion.
At the annual shareholders’ meeting in April 2023, Sacombank’s leadership announced that it would sell debts related to Phong Phu Industrial Park and would not lose capital or foregone revenue. “Currently, the bank is conducting the final auction and there is some interest from investors. We hope to resolve this in 2023,” the leadership said at the meeting.
