VIB profit up 12 per cent in H1

VIB’s return on equity ratio stood at 29 per cent, maintaining its presence in the banking industry’s leading group in terms of operational efficiency. It maintains a strong balance sheet with improved asset quality and highly prudent risk management metrics.

Strong revenues and effective cost control

In the first six months of this year, VIB's total operating income reached more than VND10.3 trillion ($434.69 million), an increase of more than 18 per cent against last year's period. The growth is attributed to interest income, which increased by nearly 21 per cent over the same period and reached over VND8.7 trillion ($367.16 million).

Despite fluctuations in both deposit interest rates and lending rates, the bank maintained a highly effective net interest margin at 4.7 per cent by optimising its capital and profitable assets.

Digital transformation helps the bank to cut their costs to income ratio to 32 per cent, down 2 per cent points on-year. Therefore, profit before provision expenses reached VND7.17 trillion ($302.59 million), up 24 per cent on-year. There is sharp increase in retail credit demand as well as bad debts amidst the challenging market with high interest rates in the first half of 2023.

Therefore, VIB has increased its provision buffer to nearly VND1.53 trillion ($64.57 million), more than double compared to the same period last year.

In the first half of 2023, VIB posted profit before tax of over VND5.64 trillion ($238 million), up 12 per cent on-year. In particular, the bank recorded profit before tax of VND2.95 trillion ($124.49 million) in the second quarter.

Prudent credit growth

As of June 30, VIB's total assets reached nearly VND379 trillion ($15.9 billion), an increase of 10 per cent from the beginning of this year. While many banks experience high interest rates, shrinking credit demand, and rising bad debts, VIB has implemented a prudent growth strategy and maintained and improved its asset quality. Its outstanding credit balance hit over VND235 trillion ($9.92 billion), up one per cent against the year's beginning.

However, in the second quarter, the bank recorded positive business performance with credit growth of 2.4 per cent, creating a positive premise for the growth momentum in the last 6 months of the year.

Being ranked among the highest group in 2022 by the State Bank of Vietnam, VIB is one of the banks with the highest allocation of credit limit in the industry in 2023. This presents both opportunities and challenges for VIB to prove the effectiveness and sustainability of the retail banking model, which has been developed for several years.

Currently, VIB is one of the banks with the lowest concentration of credit risk in the market. Its outstanding retail loans account for up to 87 per cent of the total loan portfolio, the highest in the industry. Of the total, over 90 per cent of loans are secured by collateral, mainly houses and residential land with full legality and good liquidity.

VIB had the lowest investment balance in corporate bonds in the industry, down 45 per cent against the beginning of the year to VND1 trillion ($42.2 million), equivalent to 0.4 per cent of the total credit balance. Most bonds are in the fields of manufacturing, trading, and consumption.

While credit growth is on a good recovery, VIB's bad debt ratio temporarily decreased from 2.62 per cent at the end of the first quarter of 2023 to 2.49 per cent at the end of the second quarter. VIB's leaders also shared that the bank will continue to monitor and review credit activities with a cautious risk appetite in order to reduce the bad debt ratio.

Affirming prestige and capacity

As of June 30, VIB's capital mobilisation reached nearly VND345 trillion ($14.56 billion), an increase of 10 per cent compared to the beginning of the year. Among them, customer deposits increased by 3 per cent. In June, VIB signed a new loan agreement with the International Finance Corporation (IFC) worth $100 million, bringing VIB's total credit limit from the IFC, ADB and other international financial institutions to $2 billion.

Safety indicators were managed at an optimal level by the bank, loan-to-deposit ratio at 68.16 per cent (within the 85 per cent regulation); short-term capital for medium and long-term loans at 24.8 per cent (the upcoming regulation will be adjusted to less than 34 per cent); and the Basel III net stable funding ratio at 113.6 per cent (within Basel III regulations of at least 100 per cent).

By pioneering the compliance and application of international governance standards, VIB constantly improves its reputation, brand, and transparency when participating in the international financial market. The successful mobilisation of long-term loans with low costs will continue to support the bank's resources to expand credit for retail customers while optimising profit margins in the coming period and continuing to maintain the highest profitability ratio in the industry.

Maintaining high capital adequacy ratio

VIB has completed the payment of 35 per cent dividends to shareholders, with 15 per cent cash dividends and 20 per cent bonus shares, according to the plan approved at the General Meeting of Shareholders in the first quarter. Besides that, VIB also completed the legal procedures to distribute 7.6 million ESOP bonus shares to employees.

After paying a cash dividend of 15 per cent, the bank's capital adequacy ratio remains high, reaching 12.02 per cent as of June 30. This figure is expected to be maintained at 12-13 per cent in 2023 compared to the SBV's regulation of at least 8 per cent.

Pioneering in technology

With a consistent customer-centric strategy in digitalisation and digital transformation, VIB has pioneered in applying many new technologies and developing value chains to bring customers better experiences. Since the beginning of 2023, VIB has rolled out new digital banking products with myriad features to bring convenience to users.

As a result, the number of transactions being made via digital channels reached 150 million times in the first half of 2023, which is set to triple against 2022. The number of active users stood at more than 1.5 million, an increase of nearly 40 per cent compared to the beginning of the year.

The bank’s MyVIB Digital Banking App and other technology solutions have received many awards and recognition from prestigious institutions such as The Asset, The Banker, Global Finance Review, Mastercard, Visa card, AWS, and Microsoft.

In the coming time, VIB's leaders share that the bank will upgrade and launch more applications for different activities, products, and customer needs, creating a banking ecosystem of digital banking and amenities everywhere. This not only brings the most diverse and best experiences to customers but also helps optimise operational processes and minimise costs for the bank.

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