Vietnam International Bank, listed on the Ho Chi Minh Stock Exchange under the ticker VIB, is a commercial bank in Vietnam.
In the first half of 2024, VIB’s total operating income rose by 0.6 percent year-over-year to reach US$417 million, while profit before tax dropped by 18.4 percent to US$185.4 million.
Net interest income fell by 8.3 percent, diverging from the broader industry trend of strong growth in this area. This was due to VIB’s credit growth reaching just 4.6 percent by the end of the second quarter, falling short of the banks’ average of 7.6 percent. This saw its net interest margin drop significantly as VIB reduced interest rates to try and compete with other banks.
Historically, VIB’s retail credit has represented a significant portion of its business. However, in the first half of 2024, retail credit growth slowed to around 3 percent and fell below the overall economy’s credit growth of around 6 percent as demand for retail credit steadily declined due to reduced worker income, leading to weaker purchasing power. Consequently, VIB’s retail credit balance also decreased, from 89.6 percent of its total credit at the end of 2022 to 82 percent by the end of the second quarter of 2024.
In contrast, net non-interest income rose by 49.7 percent, driven by robust growth in debt collection and foreign exchange trading activities.
Of note, the Commonwealth Bank of Australia, which goes by the acronym CBA, sold 5 percent of its stake in Vietnam International Bank for US$109.7 million in September. In June, Vietnam International Bank announced it would lower its foreign ownership limit from 20.5 percent to 4.99 percent, meaning CBA could only sell shares to Vietnamese buyers. Before the sale, CBA held a 20 percent stake in the bank.
Disclosure: The author does not have any financial interest in VIB stock.