Vietnam Prosperity Joint Stock Commercial Bank (VPBank) has become a familiar name in the market in general and the financial banking sector in particular not only because it has been growing quite rapidly in five recent years in all aspects, from scale to position, but it is also known to keep dominating role in the consumer finance market which is quite new in Vietnam and has brought about huge profits to this bank over the past three years.
And in one recent year, VPBank has been mentioned more when it listed more than 1.3 billion VPBank shares on the stock exchange with the capitalisation value of $2.3 billion, along with the prospect to reach $10 billion in a very near future, according to experts from Viet Capital Securities Company (BVSC).
However, 1.16 billion shares of Techcombank, which also listed on the stock exchange last August, were valuated at more than $6.5 billion, an increase of nearly three times.
Perhaps, many people have been questioning whether VPBank is being valuated too low or whether Techcombank is being valuated too high?
First, 5-7 years ago, VPBank and Techcombank only ranked Top 2 in the group of private joint stock banks, after many banks such as ACB, Eximbank, Sacombank and MB but with equally vertical growth, of which, since 2015, VPBank and Techcombank led the group in revenue when exceeding state-owned banks in profitability. At the end of 2017, each bank had more than 6.4 trillion dong after-tax profit, and the ROE was 27 percent.
In order to have such results, apart from the efforts to develop equally in all segments, VPBank also focused on FE Credit, while Techcombank relied on both wholesale and retail activities, especially loans related to real estate, bonds and insurance. In 2018, both banks target at the net profit of more than eight trillion dong, equal to 10.8 trillion dong pre-tax profit.
Along with profit, the total assets of the two banks were quite close to each other.
However, the chartered capital had significant change over the last five years, and VPBank is temporarily lagging behind Techcombank. However, in the near future, things may change if Techcombank’s plan to raise capital to nearly 35 trillion dong compared to 28 trillion dong for VPBank is carried out following the roadmap.
In terms of management and operation, both banks have the same characteristics i.e. they are governed by experienced leaders with bosses to be big entrepreneurs who used to do business in the Eastern Europe. Even, VPBank’s CEO used to be CEO of Techcombank and worked at Techcombank for 12 years.
In terms of personnel, Techcombank offers high remuneration and claims to be ready to seek for talented people around the global to serve the bank. Of which, VPBank does not necessarily have to compete at all costs but combines both, including both selection and training, with the target of bringing about long-term benefits to employees and always having successive leadership.
In terms of strategy, both banks not only want to lead in retail in Vietnam but also in the region. However, the two banks have different path. Techcombank wants to choose a safe direction and dispersed risks while VPBank wants high profits and are ready to face new risks, opportunities such as consumer loans.
Back to the story about shares, after VPBank and Techcombank listed on the bourse, there have had significant changes. Of which, VPBank increased 30 percent within 10 months while TCB lost 18 percent after 10 days listing. This reverse development helped the two banks further tighten the gap in capitalisation to 74 trillion dong (VPB) and 104 trillion dong (TCB).
And, with fundamentals in operations of these two banks as aforementioned, each investor may have had some bases to make their own judgement about the present as well as the future of the two banks’ shares that are “hottest” among joint stock group now.
