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Drastically settling debt, SHB reduced NPL ratio to a record 1.71%

01-02-2021

Saigon – Hanoi Commercial Joint Stock Bank (SHB) has just announced its consolidated financial statements of Quarter 4 of 2020 in which many important financial indicators grew impressively compared to 2019 and exceeded the plan of the General Meeting of Shareholders. In particular, in Quarter 4 alone, SHB achieved VND 805 billion of pre-tax profit, up 5.3% over the same period. For the whole year, SHB reached VND 3,412 billion VND of pre-tax profit, up 12.8% compared to 2019.

Completion of outstanding problems in the Habubank merger project for the period 2016-2020

In 2020, in addition to accompanying customers to overcome difficulties of the Covid epidemic, SHB still ensured efficient business operations and sustainable growth. On the other hand, SHB strengthened risk management, well controlled credit quality, drastically implemented measures to recover, handle bad debts, and make provisions, etc. By October 2020, SHB had completed outstanding problems in the Habubank merger project into SHB for the period 2016-2020.

Specifically, by the end of 2020, SHB’s total assets reached VND 412.9 trillion, up 13.1% compared to the end of 2019. Equity reached VND 37,727 billion. Equity reached VND 24,393 billion. Charter capital reached VND 17,558 billion.

Profit before tax of SHB in 2020 reached VND 3,412 billion, completing 104% of the plan set by shareholders, up 12.8% compared to the previous year. Return on equity (ROE) reached 15.9%. NIM reached 2.8%, up 0.8% compared to 2019. This result was achieved because SHB achieved growth in most of its business targets, promoted the development of banking services, built product packages tailored to the individual needs of each customer segment of SHB in order to provide customers with comprehensive benefits and outstanding value.

Unit: Billion VND

Item As of December 31, 2020 Growth compared to 2019 Completion of Plan
Total Assets 412,918 13.1% 101.1%
Charter Capital 17,558 45.9%
Deposits from Customers 338,634 17.4% 101.2%
Loans to Customers 305,637 15.3%  
VAMC Bond 4,247 -5.7%  
Profit before tax 3,412 12.8% 104.4%
ROE 15.9%  
NPL ratio 1.71%  
CAR ratio 10.21%  

SHB’s risk management continues to confirm its effectiveness.

In 2020, SHB set aside VND 4,534 billion of provisions to handle bad debts, most of which are bad debts of Habubank. With drastic debt settlement solutions, using provisions to deal with risks, SHB’s individual NPL ratio dropped to 1.6%, the lowest level since the merger with Habubank, ratio of NPLs and NPLs sold to VAMC dropped to below 3%, fulfilling the SBV’s target. The increase in SHB’s provision expenses also helped SHB’s NPL coverage rate as of December 31, 2020 to be at 70%, the highest level in the past 5 years. The higher the NPL coverage ratio, the more it will help SHB improve the safety of its assets, better withstand the assumptions of increasing bad debt in the market due to the impact of Covid – 19, profit in the future will be more stable due to less pressure to make provisions.

In the next years, SHB will continue debt collection and make provisions to settle all VAMC bonds. By the end of 2022, SHB will no longer have outstanding VAMC bonds.

Year Time Total NPL (Unit: VND billion) NPL ratio
2019 December 31, 2019 5,054 1.90%
2020 March 31, 2020 6,135 2.17%
June 30, 2020 7,049 2.45%
September 30, 2020 7,207 2.46%
December 31, 2020 5,253 1.71%

(NPL data over the quarters of 2020. According to consolidated report)

Safety – Transparency – Sustainability: SHB completed all 03 pillars of Basel II ahead of schedule

Also in 2020, SHB continued to implement the items of pillar 2 on the internal assessment of capital adequacy (ICAAP) process. The ICAAP process is a comprehensive assessment of capital, including senior management’s oversight of risk appetite, risk profiles, business plans, capital plans; and the coordination of units for capital stress test, which computes the required capital for critical risks under normal and stressful conditions. Up to now, SHB has completed all items of ICAAP, meeting early compliance with all 03 Pillars of Basel II compared to regulations.

During the implementation of ICAAP, in addition to calculating the amount of capital needed to meet all critical risks, SHB has built stress test models to assess capital adequacy for the 3 following years in both normal and unfavorable conditions. SHB’s stress test scenarios are selected on the basis of analyzing past events and forecasting macroeconomic developments to ensure the requirements, principles of quantitative analysis and practicality when applied.

Completing all 3 pillars of Basel II, SHB has fully complied with the requirements of the State Bank of Vietnam, received positive reviews from international organizations, contributed to enhancing the reputation of SHB in particular and the entire banking industry of Vietnam in general. The consolidated capital adequacy ratio under Basel II reached 10.2%, higher than the SBV’s regulations (> 8%).

Comprehensive innovation and breakthrough

The year 2021 is considered as a pivotal year for SHB, closing the Habubank merger process, basically handling outstanding problems under the Merger Project, opening a new stage with comprehensive innovation in both width and depth – a new decade full of positive prospects, breakthroughs and strong growth.

In the coming time, SHB will continue to improve its management capacity, reform and innovate in human resource development, improve risk management to ensure credit growth goes hand in hand with credit quality, etc.

In addition, SHB continues to invest in the application of information technology to develop many synchronous and convenient banking products and services. In 2021, SHB will promote digital technology, modernize the bank in addition to risk management and adherence to international standards to form a digital culture, a digital bank with a digital ecosystem, providing customers with excellent experience, and implementing creative, efficient and cost-effective business operation. With continuous efforts and determination to comprehensively innovate, SHB believes in successfully and strongly conquering business goals and achieving many outstanding achievements in the coming time.

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