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Banking & Finance

Vietcombank to raise $90mn via bond issue

Released at: 08:13, 26/10/2016

Vietcombank to raise $90mn via bond issue

Photo: Duc Anh

Issuance to be conducted within 90 days of October 24.

by Duy Anh

The Bank for Foreign Trade of Vietnam (Vietcombank) has been given approval by State Audit of Vietnam (SAV) to publicly offer 20 million non-convertible, unsecured bonds at a price of VND100,000 ($4.47) each, for a total value of VND2 trillion ($89.54 million).

The distribution period is within 90 days of the bond issuance registration certificate coming into effect (October 24). The bank’s charter capital currently stands at VND26.65 trillion ($1.19 billion).

The State Bank of Vietnam (SBV) earlier gave approval for Vietcombank to issue bonds this year in Decision No. 1521, in Vietnam dong with a maximum value of VND8 trillion ($358.16 million).

Bond are available to Vietnamese organizations and individuals and foreign organizations and individuals. Financial institutions, foreign bank branches and subsidiaries of financial institutions are excluded from the list of buyers. This will be the first time Vietcombank has issued bonds on the primary market.

The bank recently released its financial statement for the third quarter of this year. As at September 30 its total assets were VND737 trillion ($33 billion), up 9.4 per cent compared to the start of the year. Loans reached VND447 trillion ($20 billion), up 15.5 per cent, while deposits totaled VND573 trillion ($25.65 billion), up 14.3 per cent.

Net interest income reached VND4.49 trillion ($201 million) in the first nine months, up 13.6 per cent year-on-year. Net income from trading securities was VND203 billion ($9.08 million) and net income from held-to-maturity securities recorded a loss of VND44 billion ($1.97 million).

Operating costs were down 7 per cent to VND2.5 trillion ($111.92 million). Pre-tax profit stood at VND2.04 trillion ($91.33 million) for the quarter, up 36.6 per cent year-on-year.

In the first nine months its pre-tax profit was therefore VND6.32 trillion ($282.94 million), up 36 per cent year-on-year. Its bad debt ratio fell from 1.84 per cent at the start of the year to 1.73 as at the end of September. Doubtful debts increased dramatically, from nearly VND1 trillion ($44.77 million) to VND1.74 trillion ($77.9 million) as at September 30.

Annual targets include total assets of VND765.43 trillion ($34.33 billion), an increase of 13.5 per cent against 2015, outstanding credit of VND452.96 trillion (20.31 billion), an increase of 17 per cent, and pre-tax profit of VND7.5 trillion ($336.45 million), an increase of 10 per cent.

In late-August Vietcombank signed a memorandum of understanding (MoU) with Singaporean sovereign wealth fund GIC Private Limited over the sale of a 7.73 per cent stake. The transaction is expected to be completed by the fourth quarter.

With a 7 per cent holding, GIC will become the third-largest investor in the bank. Vietcombank was fully-owned by the State until it underwent equitization in 2007, following which it has had two major shareholders: the SBV with 77.11 per cent and Japan’s Mizuho Corporate Bank Ltd with 15 per cent. Other shareholders (including domestic organizations and individuals and foreign organizations and individuals) hold 7.89 per cent.

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