“Extraordinary” at VPBank changed the situation of Vietnamese banking

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Before the holidays of April 30 and May 1, Vietnam Prosperity Joint Stock Commercial Bank (VPBank) announced that it had signed an agreement with Sumitomo Mitsui Financial Group (SMBC) to sell 49% of its charter capital at Finance Company. One Member Limited Liability Company of Vietnam Prosperity (FE Credit).

With a valuation of $ 2.8 billion, VPBank earned nearly $ 1.4 billion. This record of selling capital at a subsidiary of a Vietnamese bank is expected to make a big change in the system landscape.

Before VPBank, a number of other commercial banks (commercial banks) in Vietnam also sold shares of affiliated financial companies to foreign partners. At this point, according to BizLIVE’s research, SHB is expected to have finished watching foreign partners to sell capital at finance companies. These deals bring “extraordinary income,” in professional terms often used.

At another bank before, responding to the press in a contact after selling his financial company completely, representatives of the Board of Directors said that the term is called “unusual income”, and for them nothing is unusual.

“Every income, every result must have a preparation, calculation, a process to be successful or not. Nothing comes by itself and is called abnormal ”, said the representative of the bank’s leadership.

With VPBank, $ 1.4 billion through the deal on “extraordinary income”, but has been prepared and built over the past 6 years, since February 2015, FE Credit has become a consumer finance company after convert. To the market, the above deal is not surprising, because it has been mentioned for many times, but it may come with an impression of a record value.

At the last 2021 Annual General Meeting of Shareholders, VPBank has set a target of 16,654 billion dong in pre-tax profit this year. However, with the above income, first of all in the profit target here is expected to create a direct comparison with the scale of the “Big 4” that the State owned commercial banks are controlling for for the first time.

At least this year, VPBank has added more than VND 32,000 billion to the thrusts – scale that no other bank can create this year even if many members are planning to increase capital, release more shares.

Thus, together with Techcombank, the private commercial banks in Vietnam have candidates for the “billion-dollar club” in profit, more importantly, there have been a comparison on par with the “big men” of state-owned commercial banks.

Notably, in terms of strength, for the first time in the history of the Vietnamese commercial banking system, the gap of potential capital between blocks has been blurred; block “Big 4” no longer holds such overwhelming dominance throughout history.

First of all, at Techcombank, by the end of 2020, the equity size has reached 74,614 billion dong, close to the “Big 4”. This year, Techcombank continues to not pay dividends and retain profits, the size of equity is expected to officially create an equal correlation.

Meanwhile, by the end of 2020, Vietcombank is leading the equity scale with 94,094 billion dong; VietinBank has 85,411 billion dong; BIDV has 79,788 billion dong. With the characteristics of not being equitized and difficult to have more capital from the state budget, Agribank is weak in this comparison.

By the end of 2020, VPBank has VND 52,793 billion of equity. However, with “extraordinary income” through the above deal, similar to Techcombank withholding this year’s profit and not paying dividends, plus about to re-sign the insurance contract, equity scale here until the end. 2021 is expected to reach about 90,000 billion VND.

Notably, at the last General Meeting of Shareholders, Chairman of VPBank’s Board of Directors Ngo Chi Dung said that at the end of the year, it is expected to increase charter capital to at least VND 75,000 billion. If so, even if Vietcombank, VietinBank and BIDV are paid dividends to increase capital this year, it is still difficult to surpass VPBank’s charter capital. Accordingly, it is expected that for the first time in the history of the Vietnamese banking system, members of the private sector surpassed this target.

The above aspects and correlations show that, in addition to the individual characteristics and stories of each sbv, the equitization model with the autonomy of the private sector has been showing more flexibility, comperability in scale development and more proactive in competition.

You cannot eat 3kg of meat today, tomorrow your body weight will increase by 3kg. VPBank may take some time to “trade” certain dilution and short-term performance indicators such as ROA, ROE to rebalance.

As for the expected size of the charter capital of 75,000 billion VND, the share price is of course divided, but the foundation for calculating capitalization size here is also a potential point for change in the landscape of the Vietnamese banking system.

Source: bizlive.vn – Translated by fintel.vn