SHB's obscure motive for $2-billion agriculture loan remains a thorny issue

Since 2012, Saigon Hanoi Commercial Joint stock Bank (SHB) has maintained a large proportion of its credit in the agriculture sector, specifically, the current agriculture loan of the bank is nearly $2 billion, accounting for 22 percent of its credit, according to the latest report of SHB.

Many top clients of SHB in the agriculture sector such as Artexport, Vegetexco, Hoan Kiem Invest JSC etc. are well connected with Do Quang Hien, Chairman of the Board of Directors of SHB and T&T Group. 

Most of these companies also have a fairly long history with SHB, mainly through subrogation agreement giving the bank the right to collect all liabilities on behalf of the clients.

The large credit spending on the agriculture companies is negatively impacting the business results of SHB.

Although, SHB's lending size is the highest among joint stock banks in both value and proportion, even surpassing Vietcombank, the interest income of SHB is much lower than banks with the same size of lending such as ACB, VP Bank and Techcombank.

As a result, SHB's profits fall too far below its competitors.

However, Hien has attributed the cause of SHB's weak business result to the merging and acquisition of Habubank six years ago.

"The merger of Habubank has forced SHB to restructure its debts, make provisions, reshuffle the operating system and thus, profit can not increase proportionately just yet," said Hien.

Overall, the agriculture companies relating to SHB are neither outstanding nor highly profitable in their business operation besides from owning a huge land fund.

For instance, Vigecam is currently managing and using six land plots in Hanoi city, Hai Phong city and Ho Chi Minh City which are rented from the Government.