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VietinBank issuing Tier-2 bonds

Released at: 08:00, 04/09/2019 BUSINESS SPOTLIGHT

VietinBank issuing Tier-2 bonds

Photo: Viet Tuan (VET)

Offering opened on August 15, totaling $215.4 million.

by Thanh Thanh

VietinBank has recently announced a Tier-2 bond public offering from August 15, with a total value of up to VND5 trillion ($215.4 million) at par. The bonds are distributed at all transaction offices and branches of the bank or at the transaction offices of the VietinBank Securities Company (VietinbankSC), who is acting as an issuing agent of the offering.

The purpose of issuing the bonds is to improve the bank’s capital capacity to ensure safety limit ratios are met, in accordance with regulations from the State Bank of Vietnam (SBV). The par value is as low as VND10 million ($431.7) per bond, with the aim of reaching the mass market, especially those seeking a safe and long-term investment product (i.e. State-owned bank rating) while still being able to benefit from fluctuations in interest rates. Compared with the 12-month term deposit interest rate, VietinBank’s bonds are 1.0-1.2 per cent higher per annum depending on the maturity.

Photo source: VietinBank

Investors can choose between bond terms of seven years or ten years.

The bank also has the right to redeem entire bonds at the redemption date, which is two years after issuance for a seven-year bond or five years after issuance for a ten-year bond. Similar to passbooks or other highly liquid assets, bondholders can pledge their bonds at VietinBank or any other accepted bank.

At VietinBank, bondholders can pledge bonds as collateral to borrow a maximum of 100 per cent of the bond’s par value. The bank also offers attractive lending interest rates for bondholders, equal to the bond coupon rate for some specific terms. Bondholders have full rights to transfer, sell, donate, and inherit bonds. Transactions can be executed easily through its broad network of its branches and at VietinbankSC.

Customers who successfully register for certain numbers  of VietinBank bonds at this time will be eligible to participate in promotional programs including “Cash back” and “Lucky draws”.

Individual and institutional customers who invest from VND200 million ($8,625) par value of these VietinBank bonds will receive cash back immediately. Retail customers who buy more than five bonds will participate in a lucky draw with the opportunity of receiving many other attractive rewards.

Besides the public offering, the bank is also actively offering bonds via  private placement and recently announced a 3rd Tier-2 bond private placement, on August 7.

VietinBank has been the leading bank in issuing bonds to the public since 2017, with a strong reputation in the settlement of interest and principal. It has the strongest shareholder structure, with 64.46 per cent of charter capital held by the government, 19.73 per cent by MUFG (Japan’s largest bank), and more than 8 per cent by the International Finance Corporation (IFC, a member of the World Bank). Its network has 155 branches and nearly 1,000 transaction offices nationwide, two representative offices, two branches in Germany, and one bank subsidiary in Laos.

The bank is gradually implementing its restructuring plan in accordance with the government’s orientation and the SBV’s approval, aiming at becoming one of the first Vietnamese banks to list on an international stock market and being in the Top 100 largest banks in Asia with sustainable, safe, and efficient growth.

As at the end of the first half of 2019, its business results grew over the same period of 2018, with a vibrant shift in income structure. Net income from service activities increased 63 per cent and income from FX trading increased 120 per cent. These figures are also its highest growth over the last five years.

Consolidated pre-tax profit is expected to reach VND9.5 trillion ($410.1 million) this year, of which VietinBank’s separate pre-tax profit will reach VND9 trillion ($388.5 million).

Ranked 242nd in the 2019 Global Rankings from Brand Finance, VietinBank is the first Vietnamese bank listed in the Top 300 most valuable bank brands in the world in 2019 and is in the Top 500 most valuable bank brands in the world for the seventh time.

Its rating is steady at “BB-” for long-term debt issuer (long-term IDR) and ceiling support from the government (SRF) by Fitch, which also upgraded its long-term IDR prospects to “Positive”. Moody Investor Services also upgraded its long-term local issuer ratings to “Ba3”.

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