In the first quarter of 2023, HDBank continued to adhere to the strategy of developing sustainably, promoting services for comprehensive financial development, especially in the second-tier urban market and rural market. With commitment to safe and effective credit growth and full application of Basel II standards the bank found many opportunities for sustainable development in the challenges.
Pre-tax profit of VND 2,743 billion, low bad debt, high capital adequacy in the first quarter of 2023
At the conference Mr. Hoang Thanh Tung, Director of Investor Relations Department, reported that in the first quarter of 2023 most of HDBank's business targets witnessed positive growth. Most impressively, deposit surged by 17.7% compared to the end of 2022, consolidated credit balance increased by 9% to VND 292 trillion, the balance at the parent bank rose by more than 10%. This growth rate is much higher than that of the whole industry (which was just under 3%).
With a high growth rate in deposits and outstanding loans, HDBank recorded total operating income of VND 5,657 billion in the first quarter, up 10.4% over the same period last year, generated from both loan interest and service fee.
HDBank's pre-tax profit in the first quarter of 2023 reached VND 2,743 billion, up 8.5% over the same period last year. Notably, the bank’s capital adequacy ratio, bad debt ratio, and profitability ratio remains at good standing in the industry. HDBank’s Capital adequacy ratio (CAR) according to Basel II standards was at 12.5%, of which tier 1 capital adequacy ratio was 10%. The consolidated bad debt ratio was 1.8% and the individual bad debt ratio stayed 1.5%, lower than the bad debt ratio of the whole industry (about 2.9% by the end of February 2023). Operating expenses were effectively managed, with an expense/income ratio of 34.6%, a good improvement from 39.3% at the end of 2022.
In addition to sustainable business results, HDBank actively promoted digital transformation initiatives that had been implemented throughout recent years, thereby "hitting" the two targets of cost reduction and customer usage stimulation. The total value of transactions on HDBank's digital channel boomed sharply by 142% over the same period, reaching over VND 277 trillion, strongly contributing to excellent business results of the first quarter of 2023.
Besides digital channel, the Bank kept expanding its coverage. As of March 31, 2023, HDBank had 347 branches and transaction offices, over 16,300 employees serving over 15 million customers.
Speed up for cash dividend right in May or early June
Investors: HDBank's 2023 targets are higher than those of other banks. In the current difficult context, are HDBank's leaders confident in completing the set plan?
Mr. Pham Van Dau - Financial Director of HDBank: First of all, I would like to inform shareholders about the issue of cash dividend. HDBank is speeding up processes and procedures so that shareholders can receive a cash dividend of 10% as soon as possible, possibly at the end of this month or early next month.
Regarding the ability to complete the 2023 plan, HDBank is confident because:
Firstly, HDBank's Q1 business result was good. As we have reported, in the first quarter of 2023, the bank's separate loan balance growth reached the top of the industry with an increase of 10%. In the following quarters, the bank can benefit from this rapid increase.
Secondly, HDBank's profitable assets continued to expand in the first quarter. This is a huge push for bank profits. It is expected that in the following quarters, bank profits will achieve even better results.
Thirdly, HDBank's NIM remained good despite the recent rapid increase in deposit interest rates. Market 1 deposit interest rate has recently fallen back to normal, which give HDBank an edge because the decline of interest rates allows better operational efficiency, and as a result NIM continues up.
Fourthly, HDBank's separate bad debt ratio was 1.5% but the figure before CIC classification was only 1%. HDBank has a good record of very low bad debts, so the bank has a strong confidence in its control over this ratio in the future.
Fifthly, in the current difficult situation, thanks to good governance, HDBank has been managed the expenses effectively. HDBank's CIR in the first quarter of 2023 continued to decline to 34.6% while at the end of 2022 it was 39.3%. Good expense management remains an advantage to ensure profits for shareholders.
With the above 5 reasons, in my opinion, HDBank can completely achieve the set targets in 2023.
HDBank is in the top of the banks with the best employee benefits
Investors: Many banks are promoting digital banking, but at the same time are also competing to develop and improve the quality of human resources as human resource is still the key determinant of business performance. What is the plan to motivate employees at HDBank in 2023?
Mr. Pham Van Dau - Financial Director of HDBank: According to the published annual report, the income of HDBank staff has improved year by year. In 2022, HDBank set its mark as one of the banks with the best employee benefit.
In addition to salary, HDBank always creates favorable conditions for employees to participate in training opportunities to become managers, with a clear career path and this is a great motivation to boost employees' efforts.
In 2023, HDBank still follows the strategy that employee income is proportional to the bank's profit, so the higher is the profit, the higher will the total salary fund be. Therefore, in order to achieve a better income, the employees can strive to bring higher profit to the bank, resulting in the increase of the salary fund and of their own income. HDBank is also a rare case that has been voted the best working place in Asia for 5 consecutive years.
Investors: Recently, many pawnbrokers and consumer lending companies are being inspected. Does this affect HD SAISON? Has the consumer finance industry bottomed out? Does HD SAISON take advantage of any opportunities in the volatile consumer lending market? What is the current market share?
Mr. Dam The Thai - Deputy General Director of HD SAISON: the inspection of pawnbrokers and financial lending companies does not affect HD SAISON. HD SAISON is still doing well and actively thanks to a quite different business orientation model compared to other consumer lenders. We mainly render loans to purchasers of motorbikes, electronic goods, etc. on installments, unlike others that mainly lend cash. In addition, HD SAISON participates in various programs to improve the quality of human life, most recently VND 10,000 billion - worker loan at preferential interest rate program, for example.
It is our belief that the inspection of pawnbrokers and consumer lending companies helps to rectify and purify lending activities for a healthier market. From a positive perspective, this protects the legitimate business units and brings the wrongdoers to the claw of the law. In particular, units and organizations that offer high interest rates and black credits will be expelled.
In our opinion, the industry's current difficulties are only temporary. Difficulties in the economy, businesses, and consumers' income reduction, plus the phenomenon of some borrowers exerting influence on social networks may foster the thought of "debt evasion" in a small group of customers, causing hindrances to debt collection.
Regarding HD SAISON's activities in the first quarter, the company had many positive highlights, profit before tax increased slightly over the same period.
HDBank's real estate and bond balance is at the safe standing
Investors: What is the situation of real estate loans and bad debts at HDBank? Does the bank hold a lot of real estate bonds? How is the operation and debt repayment of bond issuers? What does the bank do to control the risk of bad debt when the real estate and corporate bond markets are still facing difficulties?
Mr. Tran Hoai Phuong, Director of Corporate Banking: In the current economic context, real estate is quite a topical and hot issue. At HDBank, any loan to real estate business or to any other businesses is carefully considered before approval. Currently, real estate sector is viewed as well-controlled at HDBank with the loan balance being kept at about 8% of the total loan balance.
In fact, real estate is still an industry with good room for development if we manage to pin point safe, easy-to-liquid projects that meet consumer tastes. HDBank believes that the key to any disbursement in this sector is thorough review of the products that the real estate company offers.
HDBank's real estate bad debt ratio is very low thanks to the above lending criteria, only about 0.01% in the first quarter of 2023.
In the current difficult economic context or even in normal conditions, there will be businesses with cash flow slower than the initially estimated. It is important for the bank to be well-informed of each customer to offer suitable solutions for mutual benefits.
For corporate bonds, HDBank's bond outstanding is currently about VND3,700 billion, accounting for a very low proportion of total assets. HDBank believes that corporate bonds are just a part of corporate lending. The bottom line is not how much outstanding debt is but how the debt repayment capacity of the business is, based on cash flow and investment and resale feasibility. HDBank currently has room for customers with potential output projects, which may diversify our portfolio of both corporate and individual customers.
At the investor conference, Mr. Hoang Thanh Tung - Director of HDBank's Investor Relations Department said that HDBank is one of the leading listed companies on the stock market. Investors highly appreciate HDBank information transparency and commitment to shareholders. HDBank has always been proactively implementing ESG to sustainably bring the bank to new heights with the Sustainable Development - Pioneering Strategy.
