VPBank optimises business opportunities in Q2, with cost of funds well under control

VPBank’s headquarters in Hà Nội. — Photo courtesy of VPBank

HÀ NỘI — With borrowing costs effectively controlled, VPBank attained stable growth across strategic segments in the second quarter of the year.

The bank took full advantage of the business opportunities arising from positive market developments in the first half and has high expectations on the stronger economic recovery in the second half, to help its entire ecosystem accomplish the annual business targets.

Managing a composed balance sheet and effective performance

Manoeuvring through the difficulties at the beginning of the year, VPBank managed to uphold its credit growth, well balanced with fair deposits, disbursing into various segments and industries that successively met the diverse capital needs of the economy.

The consolidated loan balance at the end of June, reached nearly VNĐ647 trillion. Specifically that of the parent bank added up to VNĐ570 trillion, up 8.2 per cent year-on-year, streaming into key areas such as manufacturing and production, consumption and investment.

The two strategic segments of retail banking (RB) and SME continued to account for the bulk of the parent bank’s credit growth at 56 per cent, with a net outstanding loan balance increase of VNĐ20 trillion.

VPBank’s strategy of attracting new customers and digitalising lending processes for improved customer experience was the key for its SME’s loan growth in the second quarter of the year.

Along with SME, the RB segment reported credit growth directly from consumer loan and credit card products. Its townhouse loan segment, meanwhile, continued to gain momentum from Q1 to advance by seven per cent quarter-to-quarter, accounting for 53 per cent of the bank’s total home loan portfolio. Such progression in the home loan segment was attributed to VPBank’s appropriate adjustments to its business policies and the positive developments of the real estate market itself.

VPBank expects to accelerate its progress in the coming months to meet the annual targets. — Photo courtesy of VPBank

VPBank’s customer deposits and valuable papers were continuously aligned with its lending activities in Q2, soaring by 7.6 per cent year-on-year, which in turn helped to maintain a fair balance sheet for the bank. The lending to deposit ratio (LDR) and the short-term funding for medium and long-term loans ratio respectively stood at 81.1 and 23.5 per cent, which were both superior to the requirements of the State Bank of Việt Nam (SBV).

It is worthwhile to note that the parent bank’s cost of funds (COF) decreased from 4.7 per cent in Q1 to 4.1 per cent in Q2, thanks to the diversification of international funding sources with preferential rates and the low interest rate environment in the country that allowed the bank to offer reasonable interest rates to customers, improve net interest margin and enhance profit.

By the end of the first half, the consolidated profit before tax (PBT) increased by nearly 68 per cent year-on-year, reaching more than VNĐ8.6 trillion with contributions from the entire ecosystem. The consolidated total operating income (TOI) strengthened to more than VNĐ29 trillion, up 17.5 per cent year-on-year, in which the parent bank reported an increase of 23 per cent year-on-year, to VNĐ21.5 trillion.

Seizing opportunities, accelerating progress

Taking into account its effective management capability, relentless efforts to improve the operating system and ability to promptly seize business opportunities, VPBank expects to accelerate its progress in the coming months to meet the annual targets.

During the second quarter of the year, VPBank took the initiative to sustain its risk control activities, improve asset quality and ensure operational safety while continuing to assist customers through the difficult and challenging period. The consolidated recovery totalled more than VNĐ1.6 trillion, up more than 41 per cent year-on-year. The consolidated capital adequacy ratio (CAR) continued to be the best in the industry at 15.6 per cent.

The consumer division FE Credit, comprehensive restructuring to improve portfolio quality, increase collection performance and optimise operations gradually brought the company back to a new growth cycle – aiming at sustainability in the medium and long term. As consumer demand picked up, FE Credit’s core credit in Q2 grew by 3.5 per cent year-on-year. The disbursement volume in the quarter increased by 9 per cent quarter-on-quarter and for the first six months rose 53 per cent year-on-year. 

By the end of June, VPBank’s FDI arm gained a customer base of nearly 500 clients, with a deposit volume amounting to more than VNĐ7 trillion. This customer base is expected to further amplify as the bank makes use of its the strategic partner SMBC’s extensive network and the competitive loan packages tailor-made for the FDI clientele.

Counting on the full-year economic growth forecast of 6.5 per cent and the achievement of 6.42 per cent economic growth in the first half (Q2 alone of 6.93 per cent) built on the upsurge of the service sector and the FDI influx, VPBank will focus on its strategic segments of RB, SME, consumer finance and the emerging FDI arm, to optimise the market opportunities and maximise income and profit.

VPBank is one of the two private commercial banks that pay the largest amount of taxes towards the national budgets in Việt Nam in 2023, demonstrating the responsibility and contribution of a private enterprise to the country, according to CafeF’s Private 100 Vietnam Largest Taxpayers. VPBank has paid a total of VND5.977 trillion in taxes in the financial year ended December 31, 2023.