Vietnam Prosperity Joint Stock Commercial Bank (VPBank) just announced its record consolidated profit before tax of VND10,334 billion for 2019, exceeding the target by 9% and up 12.3% year over year.
VPBank has officially entered the VND10 trillion profit banking club. The pre-tax profit of the bank was VND5,835 billion, accounting for nearly 57% of the consolidated one. The growth rate of core business operations was up to 23.9%.
Consolidated TOI reached VND22,122 billion and that of core business operations was 20.3% year over year, consolidating the bank’s leading position in in terms of TOI. Credit growth rate reached 17.6%, above sector average. Meanwhile, customer deposits grew by 23.7% year over year, ensuring capital adequacy and fuelling business expansion.
Core segments as growth engine
The record-high profit of the bank came from almost all segments, especially from the breakthroughs of consumer finance, retail and SMEs. Thus, the bank accounted for more and more of the consolidated profit.
Profit from RB segment increased 120% year over year thanks to the farming of existing customers, acquisition of new ones, and expansion of the ecosystem to offer diverse financial products and services. This is the highest growth rate of RB segment so far, which resulted from relentless investment in foundational systems toward a modern retail bank.
SME and corporate segments also made a strong breakthrough in the past year. In particular, the profit of SME segment increased by 36% and that of corporate segments also improved significantly year over year.
While net interest income still accounted for the bulk of consolidated TOI, net fee income continued to grow strongly at the rate of 84.2%, reaching approximately VND 3 trillion. Notably, VPBank’s fee income is among the highest in the sector. The growth of fee income mainly came from card, bancassurance and payment services.
Income diversity and strong growth of many business segments resulted from relentless market research efforts of the bank to offer suitable products and fine tuning customer service over the past years.
NPLs plummeted, more room for growth in 2020
By the end of 2019, the consolidated NPL ratio reached 2.95% while the standalone one was 2.18%. Especially, VPBank redeemed all VAMC bonds worth more than VND 3,100 billion in 2019. NPL control was considered as one of VPBank’s strong breakthroughs in 2019 as the NPL ratio of the bank decrease from 4.01% at the end of 2018 to 2.18%. In order to redeem all VAMC bonds, the bank increased provision by 35.3% year over year. The decrease of NPL ratio and the redemption of VAMC bonds will create favourable conditions for greater profit growth in the upcoming years.
In addition to NPL control, the bank’s operating efficiency last year also improved remarkably thanks to organizational restructuring, process optimization, the fine-tuning of business methods and productivity improvement. The bank’s OPEX increased by 8.8% while income grew by 24.7%. Thus, CIR decreased from 40.9% at the end of 2018 to 37.9% at the end of 2019, helping reduce the consolidated CIR from 35.2% to 33, 9%.
Strong profit growth and effective OPEX management enabled the bank to remain one of the most efficient banks in the sector. ROA grew from 2.2% in 2018 to 2.4% in 2019. ROE also increased from 20.7% in 2018 to 21.5% in 2019.
The changes to both the back office and front line to achieve sustainable quality growth and optimize OPEX brought about good results in 2019 and created more opportunities for growth in upcoming years.