Vietnam’s VPBank targets 35% annual credit growth over next 5 years

Vietnam’s leading private lender VPBank expects to post annual credit growth of 35% over the next five years after taking over weaker lender GPBank, said VPBank chairman Ngo Chi Dung.

The growth target is VPBank’s top priority over the next five years, Dung told shareholders at the bank’s 2025 AGM in Hanoi on Monday.

In January, the State Bank of Vietnam, the country's central bank, announced the mandatory transfer of GPBank to VPBank.

The mandatory transfers of weak credit institutions are one of the solutions aimed at contributing to macroeconomic stability, national financial security, and social order and safety, according to the central bank.

Aiming for record profit of $971.9 million

The AGM approved a 2025 target to raise consolidated assets to more than VND1.13 quadrillion ($43.5 billion), up 23% from the beginning of the year.

Customer deposits and valuable papers are projected to rise 34% to VND742.31 trillion ($28.6 billion), while outstanding credit is expected to grow 25% to VND887.72 trillion ($34.1 billion). The bank aims to keep its standalone non-performing loan ratio below 3%.

Consolidated pre-tax profit is expected to reach VND25.27 trillion ($971.9 million), up 26% from 2024. Of this, the parent bank’s standalone profit is estimated at VND22.22 trillion ($854.6 million), up 26%, FE Credit - consumer credit division under VPBank - at VND1.13 trillion ($43.5 million), up 120%, VPBank Securities (VPBankS) at VND2 trillion ($76.9 million), up 64%, and digital insurer OPES at VND636 billion ($24.5 million), up 34%.

According to the consolidated financial statement for Q1/2025, VPBank reported pre-tax profit of VND5.02 trillion ($193.08 million), a rise of nearly 20% year-on-year, achieving 20% of its full-year target. Consolidated assets at the end of Q1 totaled VND994.04 trillion ($38.2 billion), up 8% from the beginning of the year.

The meeting also agreed on a 5% cash dividend for 2024, totaling nearly VND3.97 trillion ($152.7 million), marking the third consecutive year of cash payouts. The distribution is set for Q2-Q3/2025.

The bank approved a plan to establish a life insurance company with charter capital of VND2 trillion ($76.9 million) and intended to acquire shares to take control of a fund management company.

It was set to sign framework loan and deposit agreements with subsidiaries VPB SMBC FC and GPBank, with a maximum limit for each subsidiary of up to 35% of VPBank's charter capital at any given time.

The board of directors for 2025-2030 was elected with eight members, including two independent members and six from the previous board – chairman Ngo Chi Dung; two vice chairmen - Bui Hai Quan and Lo Bang Giang; three members - Nguyen Duc Vinh, Takeshi Kimoto, and Pham Thi Nhung; and one independent member - Nguyen Van Phuc.

The two new members are Mai Xuan Hung and Daniel Ashton Carroll.

GPBank expected to make profit of around $19.2 million this year

Informing shareholders about GPBank's operations after the mandatory transfer to VPBank, Dung said the list of personnel assigned to restructure GPBank has been approved by the central bank.

VPBank is also nearing the completion of its strategy development, in partnership with American consulting firm McKinsey & Company, with a detailed action plan.

With its available resources and expertise, VPBank’s board of directors said they are confident in successfully restructuring GPBank. It is anticipated that GPBank will turn profitable, with a minimum profit of VND500 billion ($19.2 million) this year.

Continuing with cash dividends for next two years

Regarding the cash dividend, Dung said this is the third year VPBank has implemented cash payout as part of its five-year consecutive cash dividend plan, which was announced by the bank in 2022.

The management must constantly balance capital needs for growth with shareholder interests, the chairman said.

From 2010 to 2022, the bank consistently refrained from paying dividends to prioritize growth, achieving significant expansion in scale, Dung said.

Since 2022, based on a balance between development needs and shareholder interests, the bank has begun paying cash dividends.

Over the next two years, the bank will continue with cash payout, though the dividend rate will depend on macroeconomic conditions and the bank's growth scale, he added.

Increasing foreign ownership to 49%

With regard to foreign ownership, Dung said after taking over GPBank, VPBank has been allowed to increase its foreign ownership to 49%, describing this as a great opportunity.

If macroeconomic conditions improve in the remainder of this year, foreign funds are likely to return to the stock market and make quick purchases, he said, stressing the increase in the foreign ownership is crucial for the bank to raise its strategic partners' stakes or attract new investors.

Regarding whether there is a plan to repurchase shares to support the stock price, Dung emphasized that the bank needs to focus on capital growth and expanding its scale.

Its top priority at this time is credit growth, along with the need to increase its capital base. As a result, after paying cash dividends, the bank will not repurchase shares.

For loan quality in 2025, VPBank CEO Nguyen Duc Vinh said non-performing loans this year are expected to peak in the first half, primarily concentrated among real estate borrowers, including certain projects like those of Novaland, a leading real estate developer in Vietnam.

However, the CEO held that real estate remains a key sector of Vietnam's economy, especially housing projects to meet the growing demand of the population. VPBank will maintain a reasonable proportion of real estate lending within the limits set by the central bank, focusing on supporting homebuyers, he said.

Vinh unveiled that VPBank has allocated around VND270 trillion ($10.4 billion) for personal loans, with approximately VND100 trillion ($3.9 billion) dedicated to real estate loans.

Compared to many banks, the 40% share of personal loans for real estate purchases remains relatively low, he said.

Restructuring FE Credit

Touching upon FE Credit's operations Vinh said by the end of Q1/2025, FE Credit's outstanding credit balance was approximately VND62 trillion ($2.4 billion), up nearly 30% from same period last year.

However, he noted, the total outstanding credit did not increase significantly as FE simultaneously intensified efforts in credit recovery and control.

In the first half of this year, FE's goal is to manage non-performing loans effectively, reduce the scale of risky portfolios, and operate efficiently.

The VPBank management team expects that by the end of 2025, FE Credit will enter a new growth phase, with a newly controlled and more efficient loan portfolio, while the old, risk-laden portfolio continues to shrink.

On the Ho Chi Minh Stoc Exchange (HoSE), VPBank’s VPB closed Monday at VND16,550 ($0.64) per share.