Vietnam Prosperity Finance Limited Company (FE Credit) has published its mid-year financial statement in 2019, which recorded a pre-tax profit of 2.131 trillion dong in the first half (H1) of the year, up by 36 percent over the same period of 2018. Accordingly, the contribution of FE Credit to the total consolidated profit before tax of Vietnam Prosperity Commercial Joint Stock Bank (VPBank) reached 49 percent. This ratio in 2018 was only 45 percent.
In H1, the net interest income of VPBank reached 8.508 trillion dong, up by 25 percent compared to the same period of last year. Notably, its profit from service activities soared 475 percent to 259 billion dong, mainly thanks to the 320 billion dong increase in insurance support fees and commissions, up by 40 percent to 1.110 trillion dong.
Meanwhile, the bank’s foreign exchange activities were less positive with a loss of 48 billion dong. Profit from other activities also dropped by 42 percent to 263 billion dong.
The total operating income of FE Credit was 8.983 trillion dong, up by 23 percent over the same period of last year. Meanwhile, the operating expenses also sharply rose by 31 percent (mainly due to the increasing staff costs), while the provisioning expenses grew by 13 percent to 4.085 trillion dong. Accordingly, FE Credit’s provisioning expenses are accounting for up to 66 percent of the net profit from business activities.
FE Credit’s Cost to Income ratio (CIR) of FE Credit was only 30 percent, while the CIR of the parent bank was 41 percent. Thanks to the low CIR level, FE Credit’s profit still rose at a fairly high level compared to the same period of last year, although its operating expenses rose much faster than the total income growth.
By the end of June, the total assets of FE Credit reached 64.768 trillion dong, up by 7.7 percent over the beginning of the year. Meanwhile, the company’s lending to customers increased by 9.4 percent to 58.3 trillion dong. Previously, in 2018, FE Credit’s lending to customers grew by 19 percent.
The bad debts of FE Credit were 3.121 trillion dong, down by 63 billion dong compared to the beginning of the year. Accordingly, the company’s ratio of bad debts on total outstanding credit decreased from 5.98 percent to 5.35 percent. In the bad debt structure of FE Credit, the debt group three (substandard debts) accounted for the main proportion with 2.932 trillion dong.
The capital mobilisation of FE Credit mainly depended on the issuance of valuable papers. By the end of June, the issuance value of certificates of deposits (CDs) reached 26.943 trillion dong, up by 20 percent compared to the beginning of the year. The value of bond issuance was 1.8 trillion dong, up by 33 percent. The interest rate of CDs is ranging from 5.25 percent to 9.25 percent per annum for terms of less than one year and 8.04-11.5 percent per annum for terms from one to five years. The bond interest rate for terms of one to five years is nine percent per annum.
In addition, FE Credit also recorded a large amount of capital mobilised from other credit institutions (CIs). By the end of June, the outstanding deposits and loans at other CIs of FE Credit were 16.522 trillion dong. In which, the deposits of the parent bank were two trillion dong. FE Credit mainly borrowed other CIs in foreign currencies, with an outstanding balance of up to 12.5 trillion dong.
Meanwhile, the deposits of customers (from businesses) at FE Credit were just slightly above three trillion dong because finance companies are not allowed to mobilise capital from people.
The report also stated that the average number of official employees of FE Credit in the period was 15,743, up by more than 2,700 compared to the same period of 2018. The average income of FE Credit’s employees also increased from 17 million dong to 19 million dong.
