VIB: Profit Reaches VND 4,600 Billion, Credit and Deposit Growth at 5% in H1 2024

Vietnam International Bank (VIB) announced its business results for the first half of 2024, with total operating income surpassing VND 10,350 billion, showing a slight increase compared to the same period last year. Deposits and credit growth were recorded at 5%, aligning with the industry average. The pre-tax profit reached VND 4,600 billion, corresponding to a return on equity (ROE) of 21%, positioning among the top industry. The bank has completed a 12.5% cash dividend payment and plans to distribute a 17% stock dividend to current shareholders along with more than 11 million ESOP shares to employees in Q3.

Higher Than Average Deposit Growth, Positive Credit Growth from Q2

As of June 30, 2024, VIB's total assets exceeded VND 431,000 billion, marking a 5% increase from the beginning of the year. Deposits grew by 5%, outpacing the banking sector's average of 1.5%. Credit growth as of the end of Q2 reached nearly VND 280,000 billion, up 5% from the start of the year, across the four key segments: retail, corporate clients, SMEs, and financial institutions. Credit growth has been recovering, with a 1% increase in Q1 and a 4% rise in Q2, driven by optimizing the cost of capital, reducing lending rates, and introducing innovative and competitive retail products, supporting growth momentum for the second half of the year. Notably, the retail product portfolio includes:

•    A VND 30,000 billion package for townhouses with fixed interest rates of 5.9% - 6.9% - 7.9% for terms of 6 months - 12 months - 24 months, with principal grace period up to 48 months.
•    A lending package for over 1 million apartments, offering fixed interest rates of 5.9% - 6.9% - 7.9% for terms of 6 months - 12 months - 24 months, with principal grace period up to 5 years, and approval time under 8 hours.
•    A refinancing package for loans from other banks for townhouse, apartment purchases, and home renovations, with fixed interest rates of 5.5% - 6.5% - 7.5% for terms of 6 months - 12 months - 24 months, featuring upfront disbursement support and a flexible, simple process.

As one of the highest-ranked banks by the State Bank of Vietnam (SBV), VIB has been granted a top highest lending limit, exceeding 16% for 2024. We currently have one of the highest remaining credit growth capacities in the industry for the second half of the year.

Prudent Risk Management, Industry-Low Concentration Risk, Receivables Only 0.6% of Total Assets

Amid improving but still weak credit demand, VIB maintains a prudent strategy, balancing growth target with credit quality and operational efficiency. In addition to positive credit growth compared to the same period last year, VIB’s asset quality has improved, with the non-performing loan (NPL) ratio stable at 2.4%. Group 2 loans decreased by nearly VND 2,900 billion in Q2, down 17% from the beginning of the year.

VIB continues to have one of the lowest credit concentration risks in the market, with retail loans making up over 82% of the total loan portfolio, of which over 90% are secured by real estate with full legal documentation and good liquidity.

VIB also has one of the lowest corporate bond investment balances in the industry, accounting for only 0.2% of total credit. All bonds are in manufacturing, trading, and consumer sectors. For over four years, VIB has had zero credit balance in BOT, renewable energy credit, corporate bond guarantees, and real estate bond investments.

Notably, VIB has one of the lowest levels of receivables for interest and fees, at around VND 2,600 billion, down 28% from the end of 2023, accounting for only 0.6% of total assets, compared to 1%-2% for many banks, with some as high as 3%. This reflects the quality of recognized revenue on the financial statements and VIB's prudent approach to retail credit accounting.

Key risk management ratios are at optimal level, with the Basel II Capital Adequacy Ratio (CAR) at 11.8% (regulation: above 8%), the Loan-to-Deposit Ratio (LDR) at 72% (regulation: below 85%), the short-term capital for medium- and long-term loans ratio at 26% (regulation: below 30%), and the Net Stable Funding Ratio (NSFR) according to Basel III at 117% (Basel standard: above 100%). By consistently leading in compliance and application of international management standards, VIB continuously enhances its reputation, brand, and transparency in the domestic and international financial markets.

Positive Revenue Growth, Prudent Risk Provisioning, ROE at 21%

In the first six months, VIB achieved a total revenue of VND 10,358 billion, growing 1% compared to the same period last year, with net interest income down 8% and non-interest income up 50%. Focusing on high-quality customers with good collateral and introducing competitive retail products led to a slight decrease in the net interest margin (NIM), although VIB maintained a positive NIM at 4.2%. Non-interest income reached nearly VND 2,400 billion, contributing 22% to total revenue. Notably, income from write-off recovery contributed VND 500 billion, a 2.7-fold increase year-over-year, while foreign exchange activities added VND 330 billion. Fee income grew 9%, primarily driven by credit cards and bancassurance. The number of credit cards in circulation surpassed 750,000, with credit card spending hitting a new record of nearly USD 2.4 billion in the first half of the year, up 42% year-over-year.

Operating expenses increased by 16% compared to the same period last year, due to investments in personnel, new branches, technology, digital banking, and marketing. The bank's cost-to-income ratio (CIR) averaged 32% over the past 12 months, expected to trend down by the end of 2024 as cost optimization initiatives are implemented. In the first half of the year, VIB continued to proactively increase its provision buffer, with average quarterly risk provisioning of about VND 1,000 billion, up 36% compared to the first half of 2023 but down 38% compared to the second half of 2023.

In summary, VIB's pre-tax profit for the first half of the year exceeded VND 4,600 billion, down from the same period last year. The return on equity (ROE) remained at 21%, among the top in the industry.

Dividend and Bonus Share Payout of 29.5% in 2024, Approval of 4.99% Maximum Foreign Ownership Limit

In the first half of the year, VIB completed two cash dividend payments totaling 12.5% of the charter capital. Currently, VIB is processing a 17% stock dividend for existing shareholders along with 11 million ESOP shares for nearly 2,000 employees in Q3.

During the period, VIB successfully held an Extraordinary General Meeting of Shareholders in 2024, approving amendments to the bank's charter, including setting the maximum foreign ownership limit at 4.99% of charter capital.

According to VIB representatives, amidst ongoing market volatility from global macroeconomic and political factors, VIB continues to strive towards its vision of becoming Vietnam's leading retail bank in terms of quality and scale, and a top banking partner for businesses and financial institutions. Dynamic, safe growth and maintaining a prudent risk appetite remain top priorities, along with pioneering the implementation of international standards. Additionally, VIB focuses on developing a modern, advanced digital banking platform with high information security to enhance service capacity and provide the best experience for each customer.