The Power of Words: Unlocking EVNFinance’s Capitalization for Growth

Financial Strength Enhancements

EVNFinance’s long-term B2 corporate family rating by Moody’s reflects its adequate capitalization and liquidity profile relative to its rapid loan growth in recent years, particularly in the wholesale lending segment. The rating agency affirms EVNFinance’s stable outlook and expects its key credit metrics to be sustained over the next 12-18 months.

Moody’s has given EVNFinance a positive assessment regarding its financial health.

Currently, EVNFinance is the only comprehensive financial company in Vietnam’s financial market. This allows EVNFinance to cater not only to individual customers but also to explore numerous collaboration opportunities with businesses and financial institutions across various sectors. This presents a significant competitive advantage over other financial companies in the country.

Moreover, EVNFinance’s capitalization is considered strong enough to support the company’s growth in the coming years. As of the end of 2023, its tangible common equity (TCE) ratio stood at 17.1%, up from 10.2% at the end of 2022. The company increased its equity capital through share issuances. In terms of regulatory capital, the company’s capital adequacy ratio (CAR) was 18.3% as of December 2023, well above the minimum requirement of 9% set by the State Bank of Vietnam (SBV). As per its reviewed financial statements for the second quarter of 2024, EVNFinance’s total assets exceeded VND 50.5 trillion, making it one of the largest companies in Vietnam. The company’s operations always prioritize capital safety and liquidity maintenance.

Moody’s also commends EVNFinance for its strong financial position and affirms that the company’s financial health is a significant advantage not only in Vietnam but also in the region.

Diverse Business Portfolio and Credit Risk Mitigation

According to Moody’s assessment report, EVNFinance’s loan portfolio has grown by an average of 41% in the last two years, mainly consisting of diverse wholesale lending to various sectors, including electricity, wholesale and retail trade, construction, real estate, accommodation services, and others. The primary borrowers are private companies, enterprises, and small businesses, followed by state-owned enterprises (collectively accounting for 93% of the loan portfolio), with the remaining being personal loans.

Moody’s acknowledges EVNFinance’s commendable efforts in managing non-performing loans over the years.

EVNFinance has also demonstrated effective non-performing loan (NPL) management in recent years. The company’s NPL ratio has improved since 2018 due to its successful NPL management strategies. As of the end of 2023, EVNFinance’s NPL ratio decreased to 1.3%, compared to 2.2% at the end of 2022, consistently remaining below the 3% limit set by the SBV. This positive outcome is attributed to the company’s credit growth, which has contributed to the decline in the NPL ratio.

With its impressive and positive financial performance, EVNFinance’s rating outlook has been stable for several years. The company is expected to maintain its key credit metrics at a stable level over the next 12-18 months. Regarding a potential upgrade for EVNFinance, a higher rating could be considered if the company sustains good asset quality during the assessment period, pursues prudent credit growth, and maintains its tangible common equity (TCE) to total managed assets (TMA) ratio on a sustainable basis.