September 21, 2018 23:08

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Criteria to evaluate the efficiency of State capital investment at credit institutions

11:01 | 09/03/2018

VCN- The Ministry of Finance has issued Circular 12/2018/TT-BTC guiding some contents on financial supervision and efficiency evaluation of State capital investment at credit institutions of which 100% of charter capital is owned by State and credit institutions of which 50% of charter capital is owned by the State.

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criteria to evaluate the efficiency of state capital investment at credit institutions
Results of evaluating and ranking of credit institution shall be classified under the compliance of evaluation criteria. Photo: Internet.

Accordingly, the evaluation criteria of efficiency of State capital investment at credit institutions include: total revenue, net profit, return on equity, bad debt rate and debt rate with risk of capital losses, law compliance, implementation of public products and service (if any).

The efficiency evaluation of the State capital investment at credit institution is implemented by evaluating the completion level (A, B, C) of evaluation and classification criteria assigned by the Vietnam State bank to credit institutions.

Specifically, in terms of total revenue, if the total revenue of a credit institution is equal or higher than the assigned target, it shall be ranked class A. if the total revenue of a credit institution is lower but at least equal to 90% compared to the assigned target, it shall be ranked class B. If total revenue of a credit institution is less than 90%, it shall be ranked class C.

In terms of return on equity, the credit institution shall be ranked class A, if the return on equity is equivalent to or higher than an assigned target. The credit institution shall be ranked class B, if the return on equity is lower but at least equal to 90%. A credit institution shall be ranked class C, if the return on equity is less than 90% compared to the assigned target.

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For credit a institution with planned losses, if its planned losses are lower than the target, it shall be ranked class A. If its planned losses are equivalent to the target, it shall be ranked class B. If its planned losses are higher than the target, it shall be ranked class C.

For bad debt rate and debt rate with risk of capital losses; the credit institution will be ranked class A, if its bad debt rate and debt rate with risk of capital losses is equivalent to or lower than the assigned target and tax debt rate is less than 3%, debt rate with risk of capital losses is less than 2%. The credit institution will be ranked class C when the above rate is higher than 110% of the assigned target or tax debt rate is over 3%, or debt rate with risk of capital losses is over 2.5%. The credit institution which will be ranked class B is the remaining credit institution that are not classified as class A or C.

The result of evaluation and rank of credit institution is classified under the compliance of evaluation criteria. This Circular will take effect by 19th March 2018.

By HongVan/Ngoc Loan