The Secret to VIB’s 9,000 Billion VND Profit in 2024: Unveiling the Strategies for Success

26 January, 2025

In 2024, VIB’s net interest income reached over VND 16,750 billion, a 9% decrease from the previous year. VIB attributed this to their focus on high-quality customers with strong collateral and the introduction of competitive retail lending packages, which led to a reduction in net interest margin (NIM) to 3.8%.

Non-interest income maintained a 6% growth rate year-on-year, contributing 19% to the bank’s total revenue. Fee income stood at VND 2,100 billion, driven by two main products: credit cards and insurance. VIB issued over 865,000 credit cards, with card spending reaching USD 5 billion, or an average of VND 10,000 billion per month, a more than 20% increase from the previous year.

Profit from foreign exchange trading decreased by 9% to over VND 500 billion due to increased spending on currency-related financial derivatives.

Investment securities trading profit surged by 91% to VND 248 billion. Notably, profit from other activities increased by 64% to VND 1,300 billion due to the recovery of previously written-off debts, offset by risk provisions of VND 1,247 billion, an 80% increase.

The bank’s operating expenses increased by 9% to VND 7,211 billion in 2024, mainly due to investments in people, technology, digital banking, marketing, and branch expansion. The cost-to-income ratio (CIR) stood at 35%.

During the year, VIB set aside more than VND 4,353 billion in credit risk provisions, resulting in a pre-tax profit of over VND 9,004 billion, a 16% decrease from the previous year. A VIB representative stated: “This is a substantial profit, truly reflecting the business results and market conditions.” The return on equity (ROE) reached approximately 18%.

Compared to the full-year target of VND 12,045 billion in pre-tax profit, VIB achieved 75% of its annual plan.

VIB’s Q4 and 2024 business results. Unit: VND billion

Source: VietstockFinance

As of the end of 2024, the bank’s total assets grew by 20% year-on-year to VND 493,158 billion. VIB’s total loans reached VND 324,010 billion, a 22% increase, driven by growth in all four key segments: retail, corporate, SME, and financial institutions. Retail loans accounted for nearly VND 260,000 billion, maintaining a retail ratio of 80%, with over 90% of retail loans having collateral, mainly residential and land with full legal documentation and liquidity. The balance of corporate bond investments represented only 0.2% of total credit balance, and all bonds were in the production, trading, and consumer sectors.

Customer deposits increased by 17% year-on-year to VND 276,308 billion. Individual customer deposits reached nearly VND 200,000 billion, a 14% increase. The CASA and foreign currency ratio rose by over 35%, leading to a 14% reduction in interest expense for 2024.

Loan quality of banks as of December 31, 2024. Unit: VND billion

Source: VietstockFinance

VIB’s total non-performing loans (NPLs) as of December 31, 2024, amounted to VND 11,374 billion, a 36% increase from the beginning of the year. The NPL ratio was 3.51%, while the bank reported a bad debt ratio of 2.4%.

Safety ratios remained compliant with regulations: the Basel II capital adequacy ratio (CAR) was 11.9%, the loan-to-deposit ratio (LDR) stood at 72%, the short-term capital for medium and long-term loans ratio was 22%, and the net stable funding ratio (NSFR) under Basel III was 117%.

Han Dong

– 09:28, January 24, 2025