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  • VPBank Secures $350M Loan to Accelerate Its Sustainable Finance Initiative

    VPBank Secures $350M Loan to Accelerate Its Sustainable Finance Initiative

    Vietnam Prosperity Joint Stock Commercial Bank (VPBank) has secured a substantial $350 million term loan facility in collaboration with Sumitomo Mitsui Banking Corporation (SMBC) and various development finance institutions, marking a significant stride towards sustainability in the region.

    Funding to Propel Green Initiatives and Support SMEs

    The five-year loan is poised to be a vital resource for VPBank’s sustainable finance strategy, with a keen focus on green projects that align with Vietnam’s ambitious commitment to achieving net zero emissions by 2050. This financial boost not only aims to promote eco-friendly initiatives but also aims to support small and medium-sized enterprises (SMEs), particularly those led by women, resonating with the global 2X Challenge for gender equality.

    Furthermore, the funds will flow into critical infrastructure projects in underserved areas, enhancing access to essential services such as healthcare, education, sanitation, clean water, and affordable housing. In a world where the smallest actions can spark change, one could say that this loan might just lead to a green revolution of sorts in Vietnam.

    A Collaborative Framework for Development

    As the coordinator and mandated lead arranger, SMBC plays a crucial role in the financing structure. This robust collaboration also includes notable agencies such as the Japan International Cooperation Agency (JICA), Development Financial Institute Canada (FinDev Canada), Export Finance Australia (EFA), and the British International Investment (BII). Together, they are paving a path toward a more sustainable and equitable future for Vietnam.

    Questions & Answers

    How will the funds from the loan be utilized?
    The loan will be allocated to support green projects aimed at achieving net zero emissions by 2050, assistance to women-led SMEs, and essential infrastructure development in underserved areas.

    What organizations are involved in this financing arrangement?
    The financial structure includes VPBank, SMBC, JICA, FinDev Canada, EFA, and BII, highlighting a collaborative approach to sustainable development.

    What impact does the initiative aim to have on gender equality?
    By focusing on SMEs owned or led by women, the initiative seeks to align with the global 2X Challenge, promoting gender equality in Vietnam’s business landscape.

  • VPBank eyes $1B profit

    VPBank eyes $1B profit

    VPBank expects a pre-tax profit of VND24 trillion ($1.02 billion) this year, exceeding the $1 billion milestone for the first time since its establishment.

    The news comes after the bank announced the sale of a 15% stake to a Japanese financial giant.

    The target, announced in a document sent to shareholders before the upcoming general meeting, will nudge the private lender into the ranks of the billion-dollar profit club in the banking sector, in which only Vietcombank and Techcombank are members.

    VPBank earlier this week completed a 15% stake sale to Japanese lender SMBC for $1.5 billion in the biggest acquisition ever recorded in Vietnam’s banking industry.

    The lender expects an asset growth of 39% to VND880 trillion this year, while capital mobilization and lending growth are expected to hit 41% and 33%, respectively.

    VPBank also wants its shareholders to approve a plan to increase its charter capital to VND79 trillion, the biggest in the industry, by issuing more shares.

    The banks plans to sell 30 million shares to its employees at the price of VND10,000 per share. These shares will come from the bank’s treasury shares and will be for a limited trading period of three years.

    Last year, VPBank recorded a pre-tax profit of VND21.22 trillion, up nearly 48% from 2021.

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  • Bank deposit interest rates surpass 10%

    Bank deposit interest rates surpass 10%

    Some banks have hiked deposit interest rates to 10-10.35% amid low liquidity in the system. NCB is paying the highest interest rate of 10.35% for 12-month deposits of VND1 billion (US$40,300) downwards made online. For six-month deposits, it is offering 10%. Over the past month, lenders have increased deposit interest rates frequently, even weekly in some cases.

    At least ten banks are now offering more than 9% deposit interest rates. Most have also launched promotions offering higher rates than officially listed to attract depositors. MSB is offering 9.9% to new clients if they place a deposit of at least VND1 million.

    Many, including Kienlongbank, GPBank, BaoVietBank, PGBank, OCB, VPBank, VietBank, Sacombank, and SeABank, are paying over 9% for 12-month deposits. Public banks are offering around 8% for 12 months.

    For periods of below six months most banks are paying around 6%. Banks lack liquidity and so have had to sharply hike the rates to meet the needs of business borrowers, Nguyen Quoc Hung, general secretary of the Vietnam Banks Association, said.

    The director of a large bank said the tightened bond and property markets mean some lenders have to increase deposit interest rates to ensure liquidity steeply.

    In the last two months, interest rates on deposits of six months or more have increased by 1.5-2.5 percentage points, leading to higher lending interest rates. Floating interest rates are predicted to soon surge to 15% yearly for individual borrowers and 11-12% for businesses.

    Now they are around 13% and 9%.

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  • 16 banks to lower loan interests amid Covid-19

    16 banks to lower loan interests amid Covid-19

    Sixteen commercial banks have agreed to reduce interests on existing loans of Covid-hit businesses from now until the end of the year.

    The banks include Vietcombank, Vietinbank, BIDV, Agribank, Techcombank, MB, VPBank, TPBank and Sacombank.

    Lowering interests is difficult, but this is the time when banks need to share the burden with businesses, said Nguyen Quoc Hung, general secretary of Vietnam Banks Association, at a meeting Monday.

    Agribank is committed to lowering its interests by one percentage point on average, while MB will do so for at least one percentage point.

    Sacombank will seek shareholder permission as lowering the interest by one percentage point is equivalent to 40 percent of its profit target for the year. Some other banks will do the same.

    But not all businesses will be eligible for the reduction. Bank leaders said they would focus on companies truly hurt by the pandemic

    “Real estate companies with large profits, export firms or individuals borrowing money to buy cars should not be eligible for the reduction,” said Deputy Director of Techcombank Pham Quang Thang.

    He added companies that are essential to the economy with a large workforce should be eligible.

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  • Banking sector eyes growth potential

    Banking sector eyes growth potential

    Vietnam Report JSC recently announced the nation’s Top 10 prestigious and effective public companies for 2021 with six banks including Vietcombank, ACB, VPBank, VIB, MBBank and Techcombank.

    Over the past two years, these banks have been recognized by economists and investors for their financial strength and communication capacities, their growth potential, level of sustainable development, quality of corporate governance and the positions in the industries.

    By the end of June 10, the banking industry accounted for 34 percent of HCMC Stock Exchange market capitalization with stock prices growing 18 percent in one month, 40 percent in three months, and 77 percent in six months, respectively.

    According to analysts, the above-mentioned banks have helped the banking industry affirm its position as one of the major pillars of Vietnam’s economy as the sector has contributed to regulating financial supply and demand for businesses and individuals, especially in the context of the economy being challenged by the Covid-19 pandemic.

    A JP Morgan report showed Vietnamese banks offer the best combination of growth and return on equity (ROE) in ASEAN at 18 percent, double that of other countries in the bloc.

    According to analysts, there are three growth drivers for the strong growth of the banking industry in the medium and long-term including the strength of the local economy, self-improvement and digital transformation.

    According to the World Bank, though Vietnam has been affected by the Covid-19 pandemic, the local economy still boasts many positive achievements, demonstrating its sustainable internal strength.

    Meanwhile, Vietnam is among the few economies predicted to grow positively in the coming years with major drivers being domestic production, along with consumption and exports. The banking industry, with its role as a financial support for the whole economy, is also forecast to continue growing in resonance with the national economy.

    At the same time, Vietnam’s population is expected to reach 120 million by 2050, an increase of over 20 percent compared to the present, with the middle-class proportion to double from 13 percent to 26 percent by 2026. That will open up golden opportunities for banks especially those that have considered retail business a core area.

    Currently, Vietnam International Bank (VIB), Asia Commercial Bank (ACB), Saigon Thoung Tin Commercial Joint Stock Bank (STB), Vietnam Prosperity Joint Stock Commercial Bank (VPBank) and Military Commercial Joint Stock Bank (MBBank) are recognized as five leading private banks with top retail loans.

    Notably, VIB and MBBank rank top with a compound growth rate of 49 percent and 31 percent respectively over the past five years. VIB is also considered the leading retail bank as its outstanding retail balance accounts for over 86 percent of the total outstanding balance, of which over 95 percent of retail loans have collateral.

    The banking industry has been experiencing positive changes in recent years. The dynamic business model, effective application of digital transformation and significant improvement in internal strength have brought impressive business results.

    In addition, the State Bank of Vietnam has accelerated the application of international risk management standards. That has contributed to improving the transparency of information, enhancing the prestige of local banks to domestic and international investors.

    The below table, sourced from audited financial reports of relevant banks from 2016 – 2020, mentions key financial indicators that clearly show the top six banks obviously stand out from median industry performance.

    Banks % ROE % ROA % CIR % NPL & VAMC % CAR CAGR Profit before tax 2016-2020 (%)
    VIB 29.6 2.2 40 1.7 10.1 70
    ACB 24.3 1.9 42 0.6 11.1 55
    VPB 21.9 2.6 29 3.4 11.7 27
    VCB 21.1 1.4 33 0.6 9.6 28
    MBB 19.1 1.9 39 1.1 10.4 31
    TCB
    18.4
    		3.1 32 0.5 16.1 41
    Industry median 18.8 1.6 39 1 10.8 39

    Quickly embracing digital transformation

    The banking sector’s strong growth in recent years is also attributable to the endless efforts of local banks in quickly embracing digital transformation. The banks that have actively participated in digital transformation will meet the increasing needs of customers while launching new products and services to both better serve their clients and increase business efficiency.

    Among them are VIB, MBBank and Techcombank, which have launched digital product packages like digital accounts, bank cards and completely free digital banking services to better facilitate customers.

    Amid the Covid-19 pandemic, digital solutions offered by these banks have assisted customers to make transactions and conduct basic banking services online instead of visiting branches or transaction offices.

    Analysts said banks that have a clear digitalization strategy will soon boost their market share and quickly lead the sector in terms of growth rate and quality of services. This has happened in markets like the U.S., Australia and Singapore.

    They added with the three above-mentioned growth drivers, sustainable development with many distinctive imprints of the six banks in the Top 10 is expected to be a bright spot for the banking industry and the Vietnamese economy in future.

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  • VPBank profits jump 26 pct

    VPBank profits jump 26 pct

    Lender VPBank reported a 26 percent jump in pre-tax profit last year to VND13 trillion ($564.24 million).

    The second and fourth quarters saw its highest ever quarterly profits of VND3.67 trillion and VND3.62 trillion.

    The lender’s profits exceeded those of state giant BIDV and private lender VIB.

    Its income was up 7.3 percent to VND39 trillion, with interest income accounting for nearly 83 percent.

    Services and securities trading were profitable, but foreign exchange trading caused a loss.

    Credit growth was 13.1 percent, and non-performing loans accounted for 2.9 percent.

    In 2019, VPBank had reported the sixth-largest pre-tax profit behind Vietcombank, Techcombank, Agribank, VietinBank, and BIDV.

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  • Vietnam’s interest rate rises in the lead-up to biggest national holiday

    Vietnam’s interest rate rises in the lead-up to biggest national holiday

    Banks have hiked deposit interest rates by 0.1-0.5 percentage points as the country’s spending demand surges prior to Tet. Private lender Asia Commercial Bank last Friday introduced a new interest schedule with an increase of 0.2-0.3 percentage points in rates on most deposit terms. It also offers rates proportional to the amount of deposit. Techcombank, another of the larger private banks, since January 21, has hiked rates by 0.2-0.3 percentage points for terms of up to 12 months.

    Earlier, in mid-December most private banks had upped rates by 0.1-0.7 percentage points, while state-run banks increased them by up to 0.5 percentage points.

    However, there are also a few banks that choose to ‘go against the current’ by lowering deposit rates on same products. For instance, BIDV, Vietnam’s biggest lender by assets, has just lowered interest rates on its deposit rate schedule effective from January 22.

    BIDV’s 5-month savings is now 5.2 percent interest, down from its previously 5.5 percent which was its approved ceiling rate.

    Previously, at the end of December 2018, BIDV increased the 5-month term interest rate by 0.5 percentage points per year.

    On the same day, VPBank also reduced the interest rate on their 6-36 months terms by 0.1-0.5 percentage points.

    Specifically, the bank’s regular savings interest rate with 6-11-month terms is lowered by 0.2 percentage points, and is now 7 percent. The 12-month term interest rate is 7.05 percent; both 13 and 15 month terms are down 0.2 percentage points, and are now 7.2 and 7.4 percent respectively.

    However, VPBank still currently holds the highest single interest rate in the market of 8.6 percent for its 18-36 month fixed term savings.

    Experts believe that the negative adjustment of interest rates at some banks such as BIDV and VPBank may be for the purpose of restructuring to meet the banks’ individual capital needs, and does not yet accurately reflect the interest rate trend in the following months.

    In fact, the period before the Tet Lunar New Year holiday is when cash is still in high demand in the economy, as businesses need to withdraw money to pay bonuses and salaries, and people will withdraw cash to spend for Tet which will start from February 5.

    At the conference on tasks for the banking industry in 2019 on January 9, Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu said that banks have recorded a decline in deposits.

    According to him, this is a phenomenon that banks need to keep their eyes on, to determine where the flow of capital has gone, to real estate or production, or another channel in order to make reasonable adjustments to their plans.

    Tu said the SBV had adamantly stuck to its policy to stabilize interest rates despite very high pressure to drive rates upwards in 2018. Many small banks had raised short-term deposit rates to attract capital and improve liquidity, resulting in the central bank having to pump more money into the market or use other measures to limit and keep interest rates stable for businesses.

    The deputy governor said the SBV had to balance between the conflicting interests of banks, savers and businesses to come up with an appropriate interest rate for the whole market.

    The SBV targets credit growth of 14 percent this year, the same as last year. As a result, he noted, commercial banks will have to make better quality loans this year to avoid bad debt.

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  • VPBank gets all clear to offer 1.3bln shares on Saigon market debut

    VPBank gets all clear to offer 1.3bln shares on Saigon market debut

    The bank’s market capitalization is expected to reach $2.5 billion following the offering.

    The Vietnam Prosperity Joint Stock Commercial Bank (VPBank) was given approval on August 8 to list on the Ho Chi Minh Stock Exchange (HoSE).

    The bank plans to make its IPO on August 17 under the code VPB with a reference price of VND39,000 ($1.72).

    The bank’s market capitalization is expected to reach $2.5 billion following the offering, which would make it the largest private bank listed on the HoSE.

    The bank said it plans to pay its shareholders a 15 percent dividend in 2018.

    VPBank has set a consolidated net profit target of $374 million for 2018, a 50 percent increase compared to the target set for 2017.

    In the first half of this year, the bank made $141 million in pre-tax profit, equivalent to 40 percent of its annual target.

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