State-owned Commercial Banks Must Publicize Financial Reports

The State of Vietnam (SBV) has sent a document about the publicity of financial reports of State-owned commercial banks as applied to joint stock banks to the Prime Minister for approval, a source from the SBV has said. Accordingly, financial reports of State-owned commercial banks will be publicized widely to meet the needs of financial transparency as Vietnam integrates more deeply into the world economy. Possibly, State-backed commercial banks must carry out this requirement in the second quarter of 2006 after auditing results in 2005 are finished. This is also a necessary step before all State-owned commercial banks are equitised by 2010 as provided in the banking system restructuring plan.

 

Since 2005, the SBV has required joint stock banks to publicize financial reports. The publicity can be presented on banks’ websites and mass media after auditing results are accomplished. According to Mr. Kieu Huu Dung, director of the Banks and Non-bank Credit Institutions Department under the State Bank, the publicity of quarterly accounting balance sheets and annual business reports of joint stock banks has generated good results. This helps joint stock banks heighten their position and create conditions for the public and investors to update information. More importantly, this also helps the banks to improve themselves and consolidate their financial situations before sending them to the public.

 

After five years implementing reorganisation and international auditing, the financial situation of the State-owned commercial bank bloc has improved considerably. All growth criteria are quite healthy. Notably, the credit growth rate remains high, outstanding debts are kept under 7.7 per cent of the total outstanding loans, the average capital safety rate is about 4.5 per cent and all banks have gained profits.

 

According to Ms Nguyen Thu Ha, deputy general director of Vietcombank, actually, all banks have international audits. Reports are submitted to the managing agency while annual reports are publicized to press agencies. This has meant that the banks have already made public their reports in spite of small scale because they lack specific regulations. Therefore, the information publicity from the second quarter of 2006 won’t be a difficult task for Vietcombank.

 

Also according information from the SBV, the Bank for Investment and Development of Vietnam (BIDV) and the Industrial and Commercial Bank of Vietnam (Incombank) have chosen to be equitised, possibly in 2007 or 2008, apart from Vietcombank and the Mekong Housing Development Bank (MHB), which have decided to go public. However, the SBV needs to consider further the equitisation case of Agribank because of its business scope. In this case, it is possible that Agribank will sell stakes in its subsidiaries, not the entire bank.