VPBank Impact and Response in time of Covid-19

Dear Valued Shareholders, Partners and Investors,

As you may already be aware, Covid-19 pandemic has become complicated across the globe despite the efforts of many governments and medical units. Amid such emergency, Vietnam has taken solid measures against Covid-19 in a cautious manner with the involvement of the entire political system so as to achieve the “double targets”, i.e. aggressively preventing and containing the pandemic whilst resolving problems incurred, enabling production and business, and supporting the people’s livelihood and social security to fulfill socio-economic goals and missions.

As an integral part of the society, the State Bank of Vietnam (SBV) has promptly issued legal documents such as Circular 01/2020/TT-NHNN, Directive 02/CT-NHNN, Telegram 03/CĐ-NHNN, etc., which became legal ground for credit institutions and finance companies to support their affected customers in a timely manner. Practical solutions include flexible regulation of monetary policy and interest rates, loan restructuring, interest reduction and waiver, maintenance of loan bucket, simultaneous interest rate reduction to support manufacturing and business, payment fee reduction and waiver.

Proactively responding to the situation, overall, VPBank’s management board has rapidly implemented a series of countermeasures to promptly cope with the increasingly complicated pandemic.

  • Established a Steering Committee and activated business continuity plan (BCP) since the beginning of February 2020 to protect employees’ health and safety as well as to sustain sufficient resources for business-as-usual activities;
  • Developed concrete plans to deal with different scenarios that the pandemic may evolve;
  • Reviewed and evaluated impacts to affected customers and economic sectors in order to be fully prepared for appropriate business plans and policies;
  • Beefed up liquidity contingency programs to ensure operational safety;
  • Conducted stress testing in light with various stressed scenarios;
  • Formulated internal and external communication plans to encourage staff, customers, business partners and community to join hands in the pandemic prevention;
  • Reviewed cost optimization measures, reduced and postponed unnecessary projects, etc.to reduce operating expenses;
  • Tightened risk management policies, especially credit risk;
  • Boosted debt restructuring and collection processes.

In addition, the Bank has implemented a series of corporate social responsibility actions, launched financial support packages for customers, and controlled impacts on business activities with details as follows:

Support national budget and implement initiatives in the prevention of the pandemic

  • VPBank and FE Credit have donated VND 15 billion in total; VPBank employees have also donated half a day's salary for the fight against Covid-19.
  • The "Cheer up Vietnam" campaign has been launched and spread throughout the community with the aim of promoting a positive spirit amid the pandemic. VPBank will shortly launch the "Household Business Academy" program, which enables business owners to conduct transactions via online channels, in light of the social distancing order as well as to maintain their revenue sources. 

Offer interest rate reduction packages and debt restructuring for affected customers

  • Since the outbreak’s early days, VPBank has promptly adopted policies to support customers such as reducing the annual interest rate up to 1.5% for distressed corporate customers; at the same time cautiously assessing its impacts on customers to extend loan terms and restructure loans in a timely manner. By the end of March, VPBank has launched a second program offering 2% interest rate cut for corporate customers having good repayment history and credit profile.
  • For retail customers, VPBank has applied maximum reduction of 3% initial interest rate for the period of 3 to 6 months depending upon each lending package. FE Credit has also offered preferential packages including exemption of up to 10% accrued interest of the installment period or partial interest exemption for customers in loan group 2, 3, 4 and 5.
  • As of the beginning of April 2020, a number of VPBank’s retail and corporate customers have applied for debt restructuring due to Covid-19 impacts; however such customers and their outstanding balances only account for an insignificant proportion of  the portfolio. Therefore, Covid-19 impacts on the bank are relatively minor. As of now, the Covid-19 impacts on the bank’s credit portfolio are hardly measured, yet VPBank has made preparation to support customers and carry out loan restructuring in a timely and effective manner.

Encourage digital transactions

  • VPBank has encouraged customers to make cashless transactions with many preferential programs including free inter-bank real-time transfer, up to 0.2% discount of interest rates per year for online savings in most tenures, and discount of 10% - 25% transaction volumes on various e-commerce platforms. By the end of 1Q2020, transaction volume and number of transactions increased 25% and 50% y-o-y respectively.
  • $NAP application and advanced technology platform of FE Credit have facilitated easier lending and convenient cashless spending without direct contact with sales staff.

Despite initial impacts of Covid-19, VPBank has recorded a positive performance in 1Q2020 in terms of consolidated credit growth, total operating income and profit. In view of the complicated developments, the full-year business targets in 2020 are certainly challenging for VPBank.

As of now, several scenarios corresponding with all possible situations have been developed for the most effective business and operation solutions. VPBank expects an optimistic scenario in which the pandemic in Vietnam and other countries is contained by the end of 2Q2020 and people’s daily life and economic activities will be back to normal.. This will be an opportunity for production and business to bounce back and thus the Bank shall recoup growth momentum. In the scenario where the pandemic lasts until3Q2020 or later and the economy continues to stagnate, VPBank will aim at securing capital adequacy, asset quality, and stable income as well as cost optimization to ensure sufficient liquidity and capability to encounter any risks. In the meantime, the Bank shall proactively evaluate the situation as well as develop plans to promote business in preparation for post-Covid19 period.

VPBank believes that under the Government’s leadership, the solidarity and determination of all businesses and Vietnamese to overcome hardships, Vietnam is among potential countries that remains attractive to investments. VPBank’s Board of Directors and Board of Management are always determined and ready to look for opportunities to ensure business growth and fulfill the mission of joining hands with the community to support customers to overcome struggling time due to the impact of Covid-19 pandemic.

Thank you for your continuous support for VPBank and may good health and safety always be with you and your family!

Sincerely yours,

Chief Executive Officer

Nguyen Duc Vinh

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