- We attended VCB’s annual general meeting (AGM) in Hanoi on April 26, 2025. The main agenda was to (1) propose 2025 business targets, (2) approve a 6.5% private placement, (3) and approve the 2024 profit distribution plan. The Q&A section focused on VCB’s YTD performance, 2025 business outlook, its assessment of US tariff risk, private placement, and VCB Neo.
- Shareholders approved the bank’s 2025 business guidance, which includes (1) total asset growth of 10% YoY, (2) deposit growth of 8% YoY, (3) credit growth of up to 16.28% implemented in accordance with the State Bank of Vietnam (SBV)’s notification (including loans sold to VCBNeo under the mandatory transfer plan), (4) an NPL ratio below 1.5%, (5) consolidated PBT growth of 3.5% YoY vs our forecast of 15.1%, (6) parent PBT of VND42,734bn, adjusted per the SBV’s directives following consultation with the Ministry of Finance.
- Shareholders approved a private placement plan to issue up to 543.1 million shares (6.5% of total shares outstanding) to institutional investors (may include a number of existing shareholders). The plan can be executed via one or multiple offerings and shall be executed during the 2025-26 period.
- Shareholders approved a 28% stock dividend using 2024 retained earnings.
Per VCB, a potential high US tariff may affect the bank more than peers given its relatively high exposure to trade. According to estimates, if Vietnamese goods are subject to a 10% tariff rate, the country’s import-export turnover is expected to decline by over 10%. In the event the tariff rate increases to 46%, the import-export turnover could sharply decrease by approximately 55-56%.
VCB holds roughly 20% market share in international settlement & trade finance. Many of VCB's customers are exporters to the US market, particularly in sectors such as electronics, processed wood products, textiles & garments, seafood, and plastic - all of which are expected to be significantly affected by the US reciprocal tariff policy. Compared to other banks, VCB maintains a large portfolio of FDI clients, which account for over 20% of total wholesale loans, 40% of total deposits, and 50% of international payments & trade finance transaction volume.
To prepare against tariff risk, the bank has been working closely with its customers to assess the impacts and formulate responsive plans to minimize potential adverse effects. Specific solutions include (1) researching and supporting clients in shifting their export markets, (2) providing financial support to affected clients, and (3) promptly reporting to regulatory authorities to propose appropriate solutions tailored to each sector and case.
In addition, VCB has actively participated in the Government’s comprehensive solutions to prevent the imposition of the highest 46% tariff rate. For example, the bank recently signed an MOU to finance Vietnam Airlines’ purchase of 50 Boeing aircrafts and has introduced support policies for clients importing machinery from the US.
VCB delivered stronger credit growth in Q1 2025 compared to recent years. According to CEO Le Quang Vinh, the bank signed several key credit agreements in the quarter to achieve its growth targets this year. Also, the bank exceeded its customer development targets in Q1 2025. Furthermore, VCB reported positive YoY earnings growth in the quarter with strong performance in non-interest income areas such as FX sales & trading, international payments, and trade finance. However, the bank did not share specific numbers and noted that its financial statements would be released early this week.
The bank has resumed investor outreach to execute the 6.5% private placement plan. The plan has been in place for quite some time since 2021. However, due to unfavorable market conditions, including the impact of the COVID-19 pandemic and subsequent economic challenges, the plan could not be effectively implemented. With signs of economic recovery in 2024, VCB restarted the process and engaged with several potential investors. The bank received positive initial feedback from such discussions and will continue to expand its search for investors this year. However, the pace and likelihood of success will depend on macro developments, market fluctuations, and investor demand.
VCB will develop VCB Neo into a digital bank, which will not rely on traditional banking branches and human resources. Since the handover, VCB has undertaken the following: (1) conducted a comprehensive review of all operational segments of the Construction Bank; (2) rebranded the institution, now operating as Vietcombank Neo Limited; (3) performed a thorough assessment of all activities and established controls to manage weaknesses and potential risks across different operations; (4) standardized and applied advanced banking technologies; (5) strengthened the human resources system; and (6) regularly reported comprehensive evaluations of VCB Neo to the relevant regulatory authorities. By mid-April 2025, VCB successfully completed the full transition of VCB's core banking and Digibank systems to VCB Neo. Soon, a series of new technology implementations meeting VCB’s IT safety standards will be rolled out for VCB Neo.
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