VIB's total assets has reached over VND277 trillion on June 30, and credit balance over VND185 trillion, up 8.1 percent from the start of the year, despite the impact of Covid-19. 

An online event held by VIB attracted more than 180 representatives from large funds, securities companies, independent analysts and media, announcing the business results of the first six months of 2021, the strategy of maintaining growth momentum, along with the Covid-19 pandemic.

Expanding in Net Interest Margin

Since the pandemic outbreak, Vietnam International Bank (VIB) has many times reduced interest rates for corporate and individual customers. VIB aims to continue expanding its Net Interest Margin (NIM) by promoting the development of the retail segment and optimizing funding costs.

VIB's report shows the NIM trend in the last six quarters has improved significantly due to the reduction in cost of fund (COF). VIB's COF decreased from 5.4 percent in Q1, 2020 to 3.8 percent in Q2, 2021. NIM increased from 3.9 percent in Q1, 2020 to 4.6 percent in Q2, 2021.

Hoang Linh, CFO of VIB, said the bank has actively optimized the funding cost by promoting the growth of CASA, and at the same time, increasing low-cost funding on the international market. Recently, VIB signed off on a syndicated loan worth $260 million over three years with the Asian Development Bank (ADB) and a number of international financial institutions. The bank is also implementing a plan to digitize all CASA and deposit products to further grow this capital source.

On the other hand, with the orientation of focusing on retail strategy, VIB's retail loan balance in the first six months grew by double digits, reaching 14.2 percent, accounting for nearly 90 percent of the total outstanding credit balance.

The retail portfolio helps VIB reduce concentration risks and adapt well to the current volatile market environment. VIB is also one of the banks with the highest retail loan proportion in the market today.

VIB's NIM trend in recent months. Photo by VIB.

Strong balance sheet

Customer deposits in the first six months increased by over 12 percent.

VIB's NPL ratio decreased to 1.3 percent. With strict risk management, the bank has well maintained its risk indicators and prudential ratio. Capital adequacy ratio (CAR) according to Basel II is at 10.3 percent, and the loan-to-deposit ratio, at 73.1 percent.

The CFO shared that, since the beginning of 2020, more than 3,000 customers have received restructured debt under Circular 01 and 03 of the State Bank of Vietnam (SBV), with nearly 10,000 customers entitled to a reduction in interest rates from 0.5 percent to 2 percent.

From July 15, 2021, VIB continued to reduce lending interest rates for individual and corporate customers with an average reduction of 1.5 percent, focusing on customer groups severely affected by the pandemic.

With VIB's support, the outstanding balance of restructured loans was paid in full and on time by most customers, helping the bank's total restructuring loan balance decrease.

Strong growth in key business segments

With a strategy to focus on retail, according to Tran Thu Huong, head of Strategy cum head of Retail Banking, VIB's market-leading business segments include mortgage loans for real estate, automobiles, credit cards, and bancassurance.

After five years of transformation, VIB's retail loan balance was among the top 4 joint-stock commercial banks by the end of 2020. The retail segment accounting for a proportion of 21 percent profit before tax (PBT) of VIB in 2016 increased six times in terms of outstanding loans, and accounted for 70 percent of PBT by the end of 2020.

VIB business strategies are gradually receiving positive results from the automation and digitization of sales and after-sales service in retail.

VIB applies a strict risk appetite right from the product development stage, concerning customer debt repayment requirements, the loan to value (LTV) ratio is always below 80 percent, closely evaluating collateral. A total 90 percent of auto loans are for new, top car brands.

"With a tight risk appetite from the upstream, after 18 months since Covid-19 hit, the bad debt ratio of the retail segment in general and the auto segment in particular at VIB has almost remained unchanged," Huong stated.

The exchange also focused on VIB's outstanding areas of bancassurance and credit cards. Despite social distancing, VIB has maintained its top bancassurance sales in recent years, thanks to digital platforms and solutions.

Huong noted the bank's credit card opening and card spending rates reached the highest levels in its history. After more than two years of implementing its credit card business, the bank has applied artificial intelligence (AI) and big data processing (Big Data), along with modern technologies like e-KYC and e-signatures in the credit card approval process. This helped set a new record for processing and approval at only 15-30 minutes, equal to 1/500 the market average.

According to a report by Vietnam Card Association, VIB retains a top position in terms of growth in the number of credit cards and spending on cards, ranked second in the market.

Digital banking with excellent customer experience

VIB focuses on developing digital banking, with digital solutions able to reach a diverse set of customers instead of just targeting a few specific groups.

VIB focuses on developing digital solutions. Photo by VIB.

The bank has pioneered the application of leading technologies like Big Data, AI, and cloud computing (Cloud) to make the online payment experience fast, easy and convenient.

Customers can easily open accounts for payments, savings, or money transfers, etc. via VIB 24/7 at home. Tran Nhat Minh, deputy CEO cum CIO, said VIB's digital banking service had achieved 130 percent growth by 2020.

VIB also offers many 100 percent digital products and cooperates with partners like Ho Chi Minh City securities company HSC and VNDirect to help customers enjoy a convenient experience. The bank's CASA ratio is currently at 13 percent while there is much room for future growth, helping optimizing funding cost and expand NIM.

These factors have helped VIB become one of the top banks in terms of online transactions.

In the first six months of the year, VIB recorded a pre-tax profit of VND3,954 billion, up 68 percent over the same period last year. Its capital adequacy ratio (CAR) following Basel II is at 10.3 percent, and loan-to-deposit ratio, at 73.1 percent. ROE reached 32.9 percent, helping VIB remain among the top 10 most effective banks in the industry for 10 consecutive quarters.

A replay version of the meeting is available here.