According to the Hanoi Stock Exchange (HNX), on July 9th, 317.1 million shares of Viet Capital Joint Stock Bank (VietCapitalBank) will officially be listed on the Unlisted Public Company Market (UPCoM) with stock code BVB.
The reference price on the first trading day is 10,700 dong per share, equivalent to a market capitalisation of 3.4 trillion dong as soon as the bank gets listed.
VietCapitalBank, formerly known as Gia Dinh Bank, was established in 1992. In 2012, the bank officially changed its name to Viet Capital Joint Stock Bank. Previously, in 2011, Nguyen Thanh Phuong jointed the bank’s Board of leaders. At the same time, the bank also raised its charter capital from two trillion dong to three trillion dong.
Phuong was VietCapitalBank’s Chairwoman of the Board of directors (BOD) from January 2012 to April 2013, then resigned and gave the post to Le Anh Tai. Phuong is currently the bank’s member of the BOD and directly holds 14.7 million shares of the bank (equivalent to over 4.6 percent of charter capital.
Regarding the structure of shareholder, the data at the end of 2012 (when it was officially renamed VietCapitalBank) showed that the bank has three major shareholders including Saigon New Town Investment Corporation with ownership rate of 13.62%, Tan Phat Investment Trade Service Joint Stock Company with ownership rate of 12.2%, and Hoa Lam Investment Development Corporation with ownership rate of 8.15%.
However, according to data on February 18th 2020, the bank only has one major shareholder, which is Saigon New Town Investment Corporation with ownership rate of 12.88%. Notably, institutional shareholders own only more than 20 percent of the bank’s charter capital, the remaining of 80 percent of charter capital are owned by individuals.
VietCapitalBank is a small-scale bank in the system with an equity of only 3.765 trillion dong, according to the bank’s consolidated financial statement in the first quarter (Q1) of 2020. The bank’s total assets reach nearly 53 trillion dong, in which the outstanding credit in market 1 (lending to economic organisations and people) is 34.760 trillion dong.
Regarding the structure of outstanding credit, short-term loans account for about half of the bank’s outstanding credit, and the remaining are medium and long-term loans. The bank offers the most loans to wholesale and retail, and repair of automobiles, motorbikes, and other motorvehivles (accounting for nearly 27%); followed by construction loans (accounting for nearly 18%); and real estate business loans (accounting for nearly 15%).
In Q1 2020, VietCapitalBank fully acquired all special bonds of Vietnam Asset Management Company (VAMC). The bank’s bad debts by the end of March 31st 2020 were 1.004 trillion dong, equivalent to a bad debt ratio of 2.89%.
In addition to lending to economic organisations and residents, the bank has actively deposited and offered loans to credit institutions with nearly 9.5 trillion dong as of March 31st 2020.
In addition, the assets also include interests and fees receivables with a value of over 1.1 trillion dong, higher than the bank’s pre-tax profit in the period from 2012 to the end of Q1 2020. This raised a question about the bank’s profit quality.
In fact, for a bank which had a long time struggling with bad debts like VietCapitalBank, profit is not the top priority. Before buying back VAMC’s special bonds and brought the bad debt ratio to 2.89 percent at the end of Q1 2020, as of late 2019, the ratio of both on-balance sheet and off-balance sheet bad debts of VietCapitalBank was 3.28%. A year earlier, the bad debt ratio was up to 5.87%.
Since the bad debt burden has been released, the business plan of VietCapitalBank in the near future is also more ambitious, despite the large influence of the Covid-19 pandemic. Accordingly, the bank targets to increase revenue by 29 percent over the last year to 1.453 trillion dong, and achieve an after-tax profit growth of 27%, raching 160 billion dong.
To achieve the above plan, VietCapitalBank said that for individual customers, the bank will focus on unsecured lending segment and the production and business of the product group which brings high margin and have low rate of overdue debts. In addition, the bank will promote the development of credit card to increase card income, while increasing income from services to limit the dependence on interest income.
For corporate customers, VietCapitalBank will concentrate on the segment of small and medium-sized enterprises (SMEs), of which outstanding loans currently account for 70%. The bank will boost short-term lending in the direction of maintaining 60 percent of the outstanding loans, while limiting large medium and long-term loans and real estate business investment.
