Military Bank seeks to make foreign corporate clients a key growth driver

Military Bank (HoSE: MBB) has applied to set up representative offices in Singapore, South Korea, Taiwan and mainland China as the Vietnamese lender seeks to make foreign corporate clients a key growth driver.

“We aim to develop the FDI segment as one of our four core client groups, alongside large corporates, small and medium-sized enterprises, and retail customers,” CEO Pham Nhu Anh said at the bank’s annual shareholders meeting in Hanoi on Saturday.

MB recently set up a dedicated FDI division and expects the segment to grow strongly as the economy continues to open up and attract foreign investment, Anh added.

Responding to a shareholder’s question on whether the bank would raise its foreign ownership cap, chairman of directors Luu Trung Thai said the limit is currently locked as MB seeks a foreign strategic investor.

“We can issue shares at a higher price to a strategic investor, thereby benefiting existing shareholders,” he noted.

Targeting 15% rise in pre-tax profit to $1.5 billion for 2026

The AGM approved MB’s business plan for 2026, targeting a 15% rise in pre-tax profit to VND39.4 trillion ($1.5 billion) and a 28% increase in total assets to more than VND2,000 trillion (VND75.94 billion).

Capital mobilization is projected to increase by 30% and credit outstanding by approximately 30% (within the limits set by the central bank). The non-performing loan ratio is expected to be controlled at no more than 1.5%. Expected performance indicators include ROE (20-21%), ROA (2%), and CIR of 28% or less.

In 2025, MB reported pre-tax profit of nearly VND34.27 trillion ($1.3 billion), an increase of 18.9% compared to 2024 and exceeding the target by 8.9%. The bank's total assets exceeded VND1,600 trillion ($60.76 billion), a growth of 43.1%, leading the Big 5 group in asset growth rate.

Acquisition of MBV offers “breakout” opportunity

At the AGM, several shareholders questioned the bank's management over its credit growth which outpaced the industry average.

In 2025, MB’s outstanding loans exceeded VND1,000 trillion ($37.97 billion), up nearly 40% from a year earlier and roughly double the system-wide average growth of 19%. Deposits rose nearly 30% to about VND921.4 trillion ($34.99 billion), trailing credit expansion.

In reply, CEO Anh said part of the loan book had been transferred to MBV to help generate earning assets for the unit. MBV, formerly known as OceanBank, was a weak bank that MB was assigned by the central bank to take over.

Anh said the bank’s faster loan growth compared with the broader market reflected a “special opportunity” to accelerate. MB has been allowed by regulators to expand credit by around 35% following the mandatory transfer of the struggling lender.

He added that the gap between deposit mobilization and lending was not a concern. "MB’s funding sources include customer deposits, equity of around VND150 trillion ($5.7 billion), international funding of $3 billion, and interbank borrowing. The diversified funding base helps ensure liquidity balance."

By the end of 2025, MB’s loan-to-deposit ratio (LDR) stood at 79%, below the central bank’s 85% cap, indicating that safety indicators remained sound.

“Amid market liquidity pressures since late Q4/2025, the bank has maintained a balance between lending and deposits, while many others have hit regulatory ceilings,” Anh stressed.

Despite rapid expansion, asset quality has improved, with the bad debt ratio declining over the past three years and expected at around 1.5% on a consolidated basis this year, and below 1% at the parent bank.

Leveraging comprehensive financial ecosystem

At the AGM, a shareholder raised concerns that heavy reliance on lending income could weigh on long-term growth.

Chairman Luu Trung Thai said MB’s core income, like that of most banks in Vietnam and globally, comes mainly from credit activities, including deposit-taking and lending.

“Even when services perform well, they typically contribute around 30%, and at best about 34%, as the segment is highly competitive. We therefore need to maintain our core business of mobilization and lending while expanding services,” he said.

“Around this core, we are building an ecosystem. MB is among the banks with the most comprehensive financial ecosystems in Vietnam, with few peers matching its breadth,” he said.

The bank is developing the ecosystem in partnership with major groups, including strategic shareholders such as Viettel and the State Capital Investment Corporation (SCIC), as well as large private conglomerates.

“Rather than owning the entire ecosystem, we collaborate with partners to leverage and develop it,” he added, summarizing MB’s strategy as combining owned and partnership-based components.

MB currently has nine subsidiaries, namely broker MBS, MBAMC, MBCapital, non-life insurer MIC, MCredit, MB Life, MBV (fomerly known as OceanBank), and MBCambodia.

Separately, shareholders asked about MB’s plans in digital assets. Thai said the bank is considering cooperation with a foreign partner to operate in the sector.

MB will not operate a digital asset exchange but provides services to investors. The bank will partner with exchanges, focusing on payment services and cross-selling products.

Becoming a bank with the highest labor productivity

Thai said improving labor productivity to the highest level in the market is a top management priority, adding that recent investments in technology are aimed at building a platform-based business model to connect customers and service partners.

“An ecosystem is a platform that allows us to deliver a wide range of services to customers across segments, helping us build a large customer base,” he said.

The bank’s eight subsidiaries across different sectors will act as satellites, providing services to its existing customer base and enhancing overall value. MB aims for these units to contribute up to 30% of total profit, from around 10% currently.

The chairman stressed that nothing is more important than customers. "If we have a large, active, and loyal customer base, that is our most valuable asset - there is nothing more valuable than that. Therefore, we are doing everything possible to improve service quality, retain customers, and take care of them within our system. As a result, partners will naturally be drawn to us."

Expanding charter capital to $3.9 billion

MB plans a significant increase in its charter capital this year. The bank expects to enlarge its capital from VND80.55 trillion to a maximum of VND102.69 trillion ($3.9 billion)

The capital increase plan consists of three components. Issuing shares to pay dividends: MB plans to issue shares at a rate of 15%, equivalent to issuing more than 1.2 billion additional shares to increase capital by over VND12.08 trillion ($458.78 million).

Issuing rights to purchase shares to existing shareholders: the bank plans to offer 805.5 million shares to shareholders at a price of VND10,000 ($0.38) per share. The corresponding exercise ratio is 10%. The shares are not subject to transfer restrictions.

Private Placement of Shares: MB plans to offer a maximum of 200 million shares in a private placement, equivalent to an increase in charter capital of VND2 trillion ($75.94 million).

Of this, 62 million shares will be offered according to the plan approved by the 2025 AGM, and an additional 138 million shares will be offered. The offering price will not be lower than the book value according to MB's separate financial statements at the time before the MB board of directors approves the detailed offering plan.

Cash dividend rate of 10%

Regarding the profit distribution plan for 2025, in addition to the plan to use over VND12.08 trillion ($458.78 million) to pay dividends in shares, MB plans to use nearly VND8.06 trillion ($305.87 million) to pay cash dividends (at a rate of 10%). Thus, the total dividend payout is 25%, equivalent to VND20,137 billion (VND764.65 million).

On the Ho Chi Minh Stock Exchange, MBB shares closed Friday at VND26,450 ($1) apiece.

Q&A session

Shareholder: MB intends to change MCredit's legal status to a single-member limited liability company. Does this mean the bank intends to sell off the entire financial company?

Chairman Luu Trung Thai: MCredit is currently a limited liability company with a foreign partner holding 49%, MB holding 50%, and another shareholder holding 1%. Last year, the AGM allowed the board of directors to study options for converting the ownership structure of this entity.

The conversion of ownership aims to make MCredit become a public company and conduct an IPO in the future. According to current regulations, when an IPO occurs, a foreign shareholder cannot hold more than 20% of the capital, so the bank needs to restructure its ownership. MB will not sell Mcredit because the company is operating effectively despite the difficulties facing the consumer finance industry.

Shareholder: Compared to the strong scale of parent bank MB, subsidiaries MBS (brokerage) and MB Capital have not developed proportionally. What plans does MB have for the development of the duo?

Chairman Luu Trung Thai: MBS is not small and makes a significant contribution to MB. At times, the MBS share price was even higher than MBB's.

Currently, the units are undergoing a strong restructuring of digital business so that MBS and MCredit can contribute more to the system. The bank is leveraging the relationships between MB, MBS, and MCredit's customers, especially by strongly implementing investment banking solutions.

The business targets and growth rates set for these two companies this year are very big, promising to make a significant contribution to the entire system next year.

Shareholder: Please give us an update on MB's real estate lending situation, specifically Novaland's loans.

CEO Pham Nhu Anh: The real estate sector is a matter of great concern to shareholders because many banks have recently tightened lending to the real estate sector.

The total size of MB's current real estate lending is less than 12% of its entire portfolio. This means that real estate business lending is around 10%, and the board of directors is closely monitoring this.

MB's non-performing loan ratio for real estate is very low. If MB's overall non-performing loan ratio last year was 1.2%, then the real estate ratio was much lower. Shareholders can feel secured as MB has been very cautious in lending to the real estate sector.

Regarding Novaland, I think it is not a concern now, because all of Novaland's key projects, especially the Aqua City projects, have had their problems resolved. The projects have been able to obtain land titles, sales have resumed, and construction has resumed.

I believe Novaland has overcome its difficult period; the difficulties weren't internal to Novaland but stemmed from the mechanisms and legal issues surrounding the projects.

Novaland's outstanding debt, as clearly shown in the company's financial statements, has not increased and is not classified as bad debt by the bank. "Novaland has had no bad debt related to MB since we established our relationship."