VPBank: 2023 Revenue and Profit Challenges, but Continued Investment in Platform and Ecosystem
Hanoi, April 29, 2024 – Joint Stock Commercial Bank for Industry and Trade of Vietnam (VPBank – VPB) held its 2024 Annual General Meeting of Shareholders today.
CEO Nguyen Duc Vinh: 2023 Faced Revenue and Profit Difficulties, but Investment in the Platform and Ecosystem for Future Growth
At the General Meeting, Mr. Nguyen Duc Vinh, General Director of VPBank, stated that VPBank achieved important milestones in 2023. The bank executed the largest M&A transaction in the financial market by selling capital to SMBC. This provided VPBank with nearly 1.5 billion USD, solidifying a solid foundation for the bank’s next growth phase as the economy recovers.
The bank strengthened its growth platform and continuously expanded its customer ecosystem. Notably, the ecosystem of core customers has reached over 13 million, an increase of 4 million. The bank has also significantly invested in technology and risk management.
“In challenging circumstances, we may face difficulties in terms of revenue and profit, but we have not ceased to invest in the platform to prepare for growth,” said Mr. Vinh.
Despite the difficult economic conditions of the past year, the bank still prioritized scale expansion. After VPBank’s equity capital rose to the second largest in the system, behind only Vietcombank, the management team determined the need to create growth opportunities and ensure capital efficiency for shareholders. Due to the rapid increase in equity capital, ROE has decreased, requiring time for strong recovery.
In 2022-2023, VPBank was among the banks with the highest credit growth in the market. VPBank achieved outstanding loan, deposit, and customer size among the largest joint-stock banks. “Of course, we understand that rapid growth also carries risks, but we believe this is necessary to create scale advantages for VPBank in the coming years.”
In addition, VPBank is also exploring new business opportunities. VPBank is one of the few banks that, since 2018, has declared its intention to develop multifunctionally, meaning a comprehensive strategy for the development of various segments. While 10 years ago, the focus was on the retail and SME segments, recently VPBank has publicly announced that it will develop all segments of the bank, including various segments such as large corporates, medium-sized enterprises, and soon, investment banking, asset management, and foreign customer segments.
Mr. Vinh shared: “Why the change? In the past, our limited capital scale prevented us from accessing many large segments, but now, with a large capital platform and the support of SMBC, we are confident that VPBank has the strength and resources to develop comprehensively.”
The General Director of VPBank also emphasized the implementation of a comprehensive restructuring of FE Credit. After 10 years of bringing significant value to the bank, FE Credit entered a difficult period due to COVID-19. Many workers could no longer afford to repay, leading to an increase in FE Credit’s non-performing loans (NPLs). Therefore, the bank implemented various measures to reduce growth and ensure asset quality. This also provided an opportunity for management to review the business model and undertake restructuring. SMBC also assisted FE Credit in reassessing the model and restructuring the portfolio. Currently, FE Credit’s portfolio remains the largest in the consumer credit market, but changes in quality are needed. Positive signs have emerged with the decline in the rate of decline and the growth of disbursements in Q4 2023 and Q1 2024. The decline in asset quality has also been halted, bringing FE Credit’s NPL ratio below 20%.
VPBank has also developed investment banking through its brokerage firm VPBankS. This is one of the three brokerage firms with the largest charter capital. Insurance company OPES, although recently acquired at the end of 2022 after integration into the system, has already brought in over 160 billion VND of profit for VPBank.
5 Key Growth Priorities for 2024
The General Director of VPBank stated that the 2022-2026 growth target remains unchanged. If we have been slow in any areas in the past, then the coming years, especially the 2024-2025 period, will be the time for management to accelerate, overcome, and regain our growth. There are 5 key growth priorities for 2024.
Firstly, focus on asset quality. Although the impact of 2023 has not yet passed, and the difficulties in the real estate market have not subsided, VPBank still sees opportunities in government support for the market and the potential for demand and supply to recover. However, VPBank has been very cautious, with growth in Q1 2024 not yet significantly high. The second half of 2024 will be the time when demand in the market begins to recover, with a possible strong recovery in 2025. Nevertheless, we remain optimistic in preparing for that growth.
Secondly, aligning all customer segments. The focus will be on the strategic segment of individual and SME customers, with growth of 25-3
