ACB profits can increase up to 70% in 2018

After completing the risk setting for group of 6 companies and recovering VAMC bonds last year, ACB’s provisioning expenses in 2018 will decrease sharply, significantly increasing the bank’s profit.

According to the VCBS Securities Report, in 2018, Asia Commercial Bank (HNX: ACB) will record a total operating income of 13,289 billion VND, up 16% over the previous year. In which, net interest income reached 10,276 billion dong, up by 21.5%.

ACB’s credit growth in 2018 continued to focus on the retail market (including retail customers, SME customers).


In particular, the bank has no plans to expand unsecured lending – the business segment accounts for about 10% of ACB’s total outstanding loans. Thus, VCBS highly appreciates the bank’s future credit portfolio, mainly in the low-risk collateral segment.

The service segment is expected to contribute a larger amount to ACB’s total non-interest income. The main reason is that the CASA ratio (demand deposit ratio) has been markedly improved, which has a big impact on service fee income.

On the other hand, the bank has implemented a number of operational programs and digital banks to increase the amount of payment deposits, contributing to further increase in fee income.

After completing the provisioning for the group of 6 companies and recovering VAMC bonds, VCBS believes that ACB’s risk provision expense in 2018 will only have to be made for newly formed subprime loans. .


Making all outstanding debts in 2017 also creates expectation that ACB can completely handle this group of bad debts in the coming years. As a result, the reversal of provision or income from the transfer of collateral is likely to be added to pre-tax profit (collateral value in group of 6 companies are mainly stocks, letters of guarantee from enterprise).

VCBS forecasts that ACB’s risk provisioning cost will decrease by nearly 30% compared to 2017, to only VND 1,809 billion.

Accordingly, ACB can record pre-tax profit of 4,532 billion dong, up by 71%, NIM rate slightly increased to 3.5%.

VCBS’s forecast is based on assumptions:

  1. Credit growth in 2018 was 21% equivalent to 2017 due to the expectation that ACB will retain high credit growth compared to the industry, 18% deposit growth ensures that LDR is maintained at 77%, in threshold regulated by the State Bank of Vietnam.
  2. The input interest rate level of ACB increased slightly by 0.1% because banks mainly mobilized from savings deposits.
  3. ACB’s NPL ratio in 2018 was 0.8% (an increase of 0.1% compared to 2017) and the bank still maintains a prudent policy of risk management, the ratio of DPRR for bad debt coverage reached 140 %.
  4. CIR 52% continued on a downward trend but not too much compared to previous years as the bank has changed from restructuring to focus on business activities.
  5. In 2018, ACB will complete the increase in charter capital from 10,273 billion VND to 11,259 billion VND through dividends in common shares at the rate of 10% (shareholders owning 10 shares will be entitled to receive 01 new shares).

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* Source: Partner


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