HDBank looks beyond HSX listing

In the morning of January 5, 981 million HDB stakes went on the southern bourse at the starting price of VND33,000 ($1.50). With its debut on HSX, the lender is expected to become a highlight of this year, after ending 2017 on a high note with a successful initial public offering (IPO) to foreign investors in December.

A unique stand

After five years of merging with DaiABank, HDBank has risen from the top 30 banks back then to stand in the top 10 best-performing commercial banks in Vietnam.

At the initial price of VND33,000, the proceeds from the sale will ensure the lender’s position among the top 20 companies with the largest capitalisation on HSX.

This price is very close to the price that some 76 foreign investors, including Deutsch Bank AG, Credit Saison, and JP Morgan Vietnam Opportunities Fund, have paid earlier for 21.5 per cent of HDB holdings, the second biggest IPO in the Vietnamese banking sector earning a total $300 million in proceeds.

The bank’s outstanding performance, together with its phenomenal IPO and the initial price being much higher than its peers’, have indeed spoken for the lender's enormous potential and helped establish a strong ecosystem for the bank.

The way the lender has got to its current standing is largely due to the macro-vision, strategy, business organisation, and also the design and quality of its products and services. What is more, the lender’s strategy targets to support its retail banking business—the segment few other banks have created a strategy for.

At a ceremony to grant holding certificates to the 76 investors last month, HDBank’s vice chairwoman Nguyen Thi Phuong Thao said, “We have prepared everything we need to reach the growth target set by the end of 2021 with the clear target of becoming a top retail bank producing an average annual growth of 25 per cent, covering 15 million clients by 2020.”

The billionaire also stressed, “With an ecosystem that covers aviation, supermarkets, telecommunications, and also the capacity to merge or acquire other businesses, we aim to rise to the top of the market. We believe in our ability to maintain a constantly high growth, to reach high revenue growth through the ecosystem that we have built up so far, to keep an extensive portfolio of products and services on offer, and to maintain an advanced technology system to compete in the blooming banking and finance sector in Vietnam.”

HDBank's ecosystem and condensed distribution network is a rather unique feature that no other bank in Vietnam can boast of.

Pooling consumer networks

Earlier in 2016, HDBank was assigned by the Ministry of Finance (MoF) to relend a package of official development assistance (ODA) loans worth almost VND3 trillion ($136.36 million) from Japan International Cooperation Agency (JICA) to fund the second phase of the Nhon Trach water supply project in Dong Nai province.

HDBank was assigned to relend an ODA package of almost VND3 trillion ($136.36 million) to the Nhon Trach water supply project

With this, the Ho Chi Minh City-based lender has gained the creditability from the local authority to manage the ODA fund, signifying potential to access nearly 3 million customers in the province.

For a bank that focuses on retail, the customer base and customer satisfaction often outweigh profit. HDBank has been blessed with an ecosystem where a rich network of customers and distribution is far more valuable than the figures and percentages in the financial statements.

HDBank is often associated with Vietjet, for it shares the same leader—the renowned businesswoman Thao—with the low-cost carrier. To be more specific, HDBank owns 15.95 million Vietjet shares, equivalent to 4.95 per cent of the carrier's charter capital. The founding partner of HDBank is also the founding partner of Vietjet.

At the end of 2017, Vietjet’s passenger count was estimated at 20 million passengers and the carrier had over 18,500 ticket agents, which is regarded as solid grounds for HDBank to seize business opportunities in the time to come.

Meanwhile, HDBank has HD Saison Finance, currently ranked the third in terms of market share, to cover over 2.3 million customers and 7,500 outlets.

The ecosystem that incorporates HDBank, HD Saison, and Vietjet has in fact created a customer base of tens of millions, with tens of thousands of distribution outlets nationwide.

Beyond this ecosystem, HDBank also has access to other areas, such as consumer retail and telecommunications through Thao.

HDBank's aims are similar to the dairy giant Vinamilk, which owns over 50,000 distribution outlets across the country. Through the cooperation between HDBank and Saigon Coop Mart, whose distribution units have reached 82 in number, an even bigger ecosystem is expected to be created.

In addition to traditional banking, HDBank will now be able to capitalise on this ecosystem to boost its retail arm which is anticipated to rocket in the years to come, with fierce competition on the horizon.

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