Expanding scale, abundant liquidity
At the end of the first 3 months of the year, the bank's consolidated credit balance reached more than VND503 trillion, in which individual banks achieved a growth rate of more than 7% from the main growth drivers being the two strategic segments of individual customers (KHCN) and SMEs - accounting for 60% of the credit portfolio.
Notably, outstanding credit balance of the science and technology segment reached more than VND200 trillion in the first quarter, thanks to increased domestic consumption demand in the months before Tet, creating momentum for credit card products, loans to buy townhouses, business loans, etc. to flourish.
Along with that, mobilization from customers and valuable papers increased by nearly 12% compared to the end of 2022, contributing to ensuring liquidity and creating momentum for the bank's high credit growth target in the coming months, when loan demand increases with the economic recovery.
Thanks to its high segment coverage from individuals to small, medium and large enterprises, along with a series of specialized products and services "tailored" to customer needs, VPBank has successfully built a customer base of up to 26 million people. In the first quarter alone, the bank welcomed nearly 2 million new customers into its ecosystem spanning banking, securities, insurance and multi-service technology platforms. This will be a great advantage for the bank in cross-selling and optimizing revenue in the coming time.
The first quarter of 2023 also marked a major shift in VPBank's capital when it successfully signed an agreement to sell 15% of its shares to SMBC Group (Japan), helping to increase VPBank's total equity to approximately VND 140 trillion, becoming the bank with the second largest equity in the system. The thick capital buffer will support VPBank to strengthen its long-term financial capacity as well as complete its business plans in 2023.
Last March also witnessed the handshake between VPBank and cloud computing service provider Amazon Web Services (AWS), marking VPBank's efforts in continuously consolidating and perfecting digital banking features, aiming to bring superior digital experiences to customers, while promoting business growth.
Confidence in growth goals
Faced with unpredictable developments in the world and Vietnam's economy in 2023, VPBank continues to be confident, mixed with caution, in its set business targets, on the basis that the service sector continues to improve in the following quarters, thereby activating increased purchasing power and the revival of the consumer finance sector.
The bank completed the first quarter with a separate pre-tax profit of more than VND4,100 billion while FE Credit's business operations were unprofitable.
For the parent bank, fee income maintained an increasing trend in revenue structure for many consecutive quarters, when net profit from service activities in the first quarter increased by 44% compared to the same period. The main drivers for growth in service revenue include card revenue increasing by 31% compared to the same period, in which credit card transaction turnover increased by more than 70% compared to the same period and the number of cards issued increased by more than 46%.
With the expectation that the economy will have positive developments thanks to the State's policies to support enterprises, along with the continuously expanding customer base and large capital base, business activities at the parent bank are expected to have positive growth in the coming quarters and achieve the set goals.
Meanwhile, the consumer finance segment continues to be affected by the slower-than-expected economic recovery. However, with a solid business foundation and market share, coupled with the wide potential of the consumer finance sector in a market of nearly 100 million people, VPBank still has great confidence in the recovery of FE Credit in 2023 and the following years. The bank has been supporting the restructuring of consumer finance companies, including adjusting business models and products appropriately, to optimize operational efficiency.
Despite confidence in macroeconomic prospects, VPBank still maintains operational safety ratios, such as maintaining the loan-to-deposit ratio (LDR) at 76%, or complying with the ratio of short-term capital for medium- and long-term loans at 27% - lower than the State Bank's regulation of 34%.
At the same time, the bank proactively increased its risk buffer for adverse scenarios, with provisioning costs increasing by about 21% year-on-year at the parent bank and nearly 55% at the consolidated bank. This expense is expected to be offset when the market turns positive, improving customers' debt repayment capacity.
In the latest assessment, international credit rating agency Moody's announced to maintain the Ba3 credit rating since the upgrade in the middle of last year, and stable outlook for VPBank, in the context that the world financial market and Vietnam are still facing many difficulties and challenges.
Moody's also highly appreciated the sale of 15% of VPBank's shares to SMBC, thereby raising the capital adequacy ratio (CAR) to nearly 19% - the highest among the banks this organization has rated in Vietnam.
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