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Banking & Finance

VPBank's 1H pre-tax profit doubles yoy

Released at: 19:10, 27/07/2017

VPBank's 1H pre-tax profit doubles yoy

Photo: news.zing.vn

Decline in provision expenses leads to bank posting $143.4 million in pre-tax profit for first half.

by Quang Huy

A strong surge in all business activities together with a heavy decline in provision expenses saw VPBank’s pre-tax profit during the first half of this year double year-on-year to VND3.26 trillion ($143.4 million).

During the January-June period, momentum in its core businesses of credit and investment continued to grow strongly, bringing net interest income of VND9.6 trillion ($422.3 million), an increase of 40.7 per cent year-on-year, while income from services rose 81.3 per cent to VND632 billion ($27.8 million).

Forex trading continued to sink, meanwhile, though the VND42.8 billion ($1.9 million) in losses recorded in the first half was only 30 per cent of the figure in the same period of 2016. Securities trading came in at VND36.6 billion ($1.6 million), in contrast to a loss of VND84.2 billion ($3.7 million) in the first half of last year.

Securities investment grew nearly three-fold year-on-year, to VND345 billion ($15.2 million), while other activities rose 29 per cent to VND743 billion ($32.7 million).

As at June 30, total assets stood at VND248.7 trillion ($10.94 billion), up 8.7 per cent since December 31. During the second quarter, the bank’s total non-performing loan (NPL) rate fell slightly, from 2.86 per cent as at March 31 to 2.81 per cent, while bad debts parked at the Vietnam Asset Management Company (VAMC) stood at VND3.56 trillion ($156.6 million).

Earlier this month, the International Finance Corporation (IFC) approved a convertible loan of $57 million to VPBank, under which the IFC has the right to convert the principal balance to VPBank common shares during the loan term. The bank is currently completing legal procedures for the loan.

In a May 3 assessment, Moody’s upgraded its long-term deposit and issuer ratings for VPBank to B2 from B3 while at the same time upgrading its BCA and adjusted BCA to b3 from caa1. The bank’s outlook in long-term ratings remains stable.

According to Moody’s, the upgrade of the BCA and adjusted BCA to b3 from caa1 was driven by improvements in VPBank’s profitability metrics, with pre-provision income growth of 62 per cent in 2016 and 146 per cent in 2015. The strong core revenue growth is attributed to the bank’s growth and its leading market share in the high margin consumer finance business.

The credit agency also said that VPBank’s return on assets has outperformed that of its domestic peers, standing at 1.7 per cent in 2016 against 1.2 per cent in 2015, compared to an average of 0.7 per cent at the 14 other Moody’s-rated banks in Vietnam (B1 positive).

VPBank told its shareholders meeting in April that it will list on the Ho Chi Minh Stock Exchange this year, with 15 per cent being sold in a private placement. Its shares have been trading actively on the OTC market, at a price fluctuating around VND35,000 ($1.54) per share. At this price, VPBank’s market capitalization stands at approximately VND46,700 trillion ($2.1 billion), less than the three State-owned banks of Vietcombank, BIDV, and Vietinbank but much higher than other commercial banks.

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