Leading Vietnamese retail bank VIB assures loan security: chairman

Vietnam International Bank (VIB), one of the country’s major retail banks, provides secure loans despite domestic and global headwinds, and will beef up its charter capital to further drive its strong growth, chairman Dang Khac Vy said Wednesday.

“Up to 90% of our clients are in retail banking. Our top priority is to strictly control non-performing loans. Meanwhile, mortgages used for our retail loans are houses or cars, which have real liquidity,” he told the lender’s annual general meeting (AGM) in Ho Chi Minh City.

Vy assured operational security while replying to a shareholder, who mentioned the meltdown of U.S. banks last week and this week - Silicon Valley Bank, Signature Bank, and First Republic Bank. He added the U.S. Federal Reserve, due to the U.S. banking crisis, may reconsider its moves instead of aggressive interest rate hikes, which could ease global headwinds.

VIB risk director Ha Hoang Dung added that existing houses used as mortgages for bank loans are those with ownership certificates, often referred to as “red booklets”, and running cars - which come with high liquidity. Meanwhile, the average lending size for a client is just VND750 million ($31,800), therefore the lender’s NPLs are secure.

The HCMC-headquartered bank is seeking to keep its 2023 NPL ratio under 3% compared to 1.79% last year and 1.75% in 2021, said the chairman.

At present, its loans under the form of corporate bonds are equal to just 0.8% of its total outstanding loans, the lowest in the Vietnamese banking system, he said, noting that this risk control competency has been cementing his bank’s branding position.

VIB will increase its charter capital by 20.4% to almost VND25.37 trillion (over $1.08 billion) under plans adopted at the AGM. Consequently, VIB will issue shares to its existing shareholders and staff members. The capital hike aims to serve the bank’s strong and sustainable growth and digitalization strategy as well as sharpen its competitive edge and maintain human resource development.

The AGM approved the bank’s plan to offer a 35% dividend ratio for shareholders in cash (15%) and bonus shares (20%).

At present, Commonwealth Bank of Australia (CBA) is the largest shareholder in VIB, holding around 20% of its charter capital since 2010. CBA is one of the biggest banks in the world, with market capitalization of about $122 billion.

VIB chairman Vy told the AGM that he has learned from international banks like CBA how to pay dividends by cash to make shareholders happy and keep them with VIB. He added his bank had earlier considered a 38% ratio instead of 35% but later decided to offer the latter to assure the capital adequacy ratio.

The leading retail bank is listed on the Ho Chi Minh Stock Exchange as VIB. It aims to reach 10 million customers over the next few years from four million at present to further fortify its position.

Its 2022 business results show a pre-tax profit of almost VND10.6 trillion ($449.53 million) up 32.1% year-on-year, while its charter capital expanded by 35.7% to the current level. The bank’s total assets were almost VND343 trillion ($14.54 billion), up 10.8% from one year earlier. VIB expects its 2023 pre-tax profit to be VND12.2 trillion, up 15.3% year-on-year.

In July 2017, VIB took over CBA’s Vietnam branch, becoming the first Vietnamese bank to buy a foreign bank’s operations in the country. It has since then pioneered the application of technologies like big data, artificial intelligence, and cloud computing to make online payments faster and more convenient.