Awards: Vietnam shines in a stellar year

In an exciting year for Vietnam, our winners edged out key rivals in the closest competition for several years in this fast-growing market.


There are two standout banks in Vietnam: Vietcombank from the state sector and the private Techcombank. Two very different and equally successful business models make this a hard award to judge

The former utilises its government links, strong balance sheet and branch network to achieve an enviable cost of funding other banks cannot match. The latter is more focused on fee income and becoming more capital efficient.

But in the end we decided that it was still Vietcombank’s year. It continues to trade at a premium to the rest of the banking sector on the Ho Chi Minh Stock Exchange, although this is partly because investors have boosted the share price in the knowledge GIC is hoping to buy a strategic stake.

It also recorded superb results in 2017, experiencing very strong expansion, which officials say is matched by an equally strong commitment to keep NPLs below 2% on an ongoing basis.

Assets jumped 31.5% year-on-year to $45.5 billion according to SNL figures. Loans were up 18.5% to $23.57 billion and deposits rose 20.4% to $31.2 billion.

This top line growth also fed through to the bottom line, with net profit expanding 30% from $308.28 million in 2016 to $401.1 million, again according to SNL.

This performance meant Vietcombank improved its efficiency metrics too. ROAA rose from 0.98% to 1.06%, cost to income improved marginally from 43.72% to 43.48% and the overall capital ratio rose from 11.13% to 11.63%.

Perhaps more importantly, NPLs fell from 1.5% to 1.14%. As we noted last year, Vietcombank was the first lender to complete its debt write-down via the Vietnam Asset Management Co (VAMC), set up to deal with the last credit crisis.

The bank is determined to strengthen its risk management policies so it does not end up back there again. One way is by investing heavily in technology and in September 2019, it hopes to unveil a new core banking IT platform.

It has also been undergoing a strategic review with Oliver Wyman to look at its operating processes and credit checks. This is leading it to centralize its credit operations.

And then there is its expansion into retail banking. Vietcombank has 101 branches and 397 transaction offices across 53 cities and provinces. In 2018, the regulator is allowing it to open five more branches and 34 transaction offices.

It aims to raise retail banking as a percentage of revenues from 40% to 50% by 2020. This is part of a strategic plan focused on enhancing customer satisfaction. To this end, the bank also appointed the first foreigner to a senior leadership last year, hiring former HSBC banker Thomas William Tobin to lead its retail banking operations.


This is also a very difficult award to judge because there are two very strong competitors in Vietnam’s domestic investment banking sector: SSI and Viet Capital. Both houses are helping to drive positive change and bring the country’s capital markets’ practices in line with international norms.

However, during the period in question, it was clear SSI was the worthy winner. And its revenue growth shows just how much has changed in Vietnam over the past couple of years as equity capital markets activity, in particular, achieves lift off.

Back in 2015, SSI recorded revenues of VND44.7 billion ($19.6 million). By 2017, the figure had leapt to VND129.5 billion ($56.3 million), almost three times higher.

During the current awards period, this growth was powered by a number of high profile deals including the largest IPO of the period: Vincom Retail’s $742 million flotation. SSI was the only domestic bookrunner on the deal, which represented the listing of Vingroup’s retail malls.

The deal was also groundbreaking as the syndicate managed to devise a structure that worked around Vietnam’s tortuous IPO process and shortened the timeframe from pricing to listing from a couple of months to a couple of weeks.

Vincom Retail also returned to the equity markets only a few months after listing, raising a further $200 million, with SSI serving as joint manager.

Other notable equity deals include: the $300 million IPO of HDBank, a $230 million secondary public offering for Hoa Phat and a $44.4 million treasury share sale for Petrolimex.

One of SSI’s biggest clients is the State Capital Investment Corp (SCIC) and it executed two divestments for the group between April 2017 and March 2018.

The largest was a $396 million sale of shares in a company foreign investors hold in the highest regard: Vinamilk. SSI initially tried to structure the deal along international lines using a bookbuilding process, but in the end had to revert back to the government’s favoured Dutch auction method thanks to the lack of a legal framework.

Its second SCIC transaction was a $103 million divestment in plastic pipes company Binh Minh Plastics. The deal represented the first major state divestment of 2018.


Viet Capital does not have the biggest broking market share across Vietnam’s three main stock exchanges. That accolade goes to arch-rival SSI whose market share stood at 16.85% at the end of the first quarter compared to Viet Capital’s 8.8%.

However, it is the main domestic broker for the foreign flows in and out of Vietnam. And if there was one dominant trend in 2017, it was foreign investors' renewed love affair with one of the most exciting frontier markets. 

Foreign funds anchor Viet Capital’s business in a way no other broker can claim. Indeed SSI has a very different business model targeting retail, which accounts for 85% to 90% of its revenues.

Retail investors also account for the majority of Viet Capital’s revenues, but only just with a 55% share compared to 45% for institutional. During 2017, foreign investors contributed 42% compared to 58% by local investors.

It was a year marked by very strong returns on the Ho Chi Minh Stock Exchange and the same applied to Viet Capital’s own shares after the company listed itself in the summer. By the market’s peak the following April, its share price had doubled.

Viet Capital is a fairly unusual animal by Vietnamese standards and employs a lot of foreigners including its well-respected head of research, Barry Weisblatt. Fund managers universally acclaim its market analysis and the depth in which it cover individual stocks.

It is not afraid to make sell calls and it highlights its decision to put a sell notice on KIDO Group in August 2017 after the shares had risen 65% in the space of a year. Since then, the shares have bucked the market’s upward trend and lost roughly one quarter of their value.

Likewise, Viet Capital also doubled down on Vingroup, telling investors the stock had momentum and value even though it had risen 74% in the space of three months last autumn. It doubled its target price and the stock responded in kind.


Techcom Securities has had a barnstorming year and carved out a very profitable niche for itself in debt capital markets, its main focus area within investment banking. This means that in terms of net profits, the group now ranks second only to SSI, which focuses on equity broking. 

Such has been its dominance that Techcom Securities led 90% of the bonds listed on the Hanoi or Ho Chi Minh Stock exchanges during 2017. During FinanceAsia’s awards period, it accounted for 40% of all corporate bond issuance, distributing paper totaling VND34.6 trillion ($2.14 billion).

One of the chief sources of its success is its iBond platform, which it launched in the second half of 2014. In 2016 it also introduced TCBF, an open-ended fund investing in fixed income instruments managed by Techcom Capital.

These products have enabled Techcom Securities to build up a 14,000-strong retail investor base and broaden distribution away from the country’s dominant bank investors. It is a strategy aligned to the government’s ambitious plan to develop and deepen participation in the domestic bond market.

One example of this process in action came during 2017 when Vingroup issued VND6.6 trillion ($292 million) through a series of bonds. Techcom Securities distributed the paper to a total of 4,300 retail investors.

Likewise, when Masan Group issued its first listed corporate bond, 30% of the VND3 trillion ($131 million) issue was placed with retail investors.

As Vietnam’s bond markets have grown, so has Techcom’s team. It is big by local standards, with 15 people working in advisory and origination, plus three in institutional sales and distribution. A further seven team members undertake agency management.

One of the key changes during 2018 will the revision of the government’s Decree 90, which concerns the domestic bond market. The government is finalising a sweeping overhaul and Techcom Securities is working as the exclusive local consultant to the World Bank, which is providing assistance to the Ministry of Finance in its review of the existing legal and regulatory framework.

Techcom Securities is a worthy winner, not just for executing the biggest deals by Vietnam’s leading private sector groups, but also for the information it provides. Its regular market updates have done much to improve transparency and educate investors in a market, which is still at the very beginnings of a fast growth period.


HSBC had a very good 2017, which was not that surprising given it was a year when foreign investors came pouring into the country from every angle. And HSBC was there to bank them and capture the flows through its strong franchises across retail, corporate and investment banking.

A number of interlocking themes helped the bank increase assets 23.9%, according to SNL figures, from $3.12 billion in 2016 to $3.866 billion in 2017. 

The first was a big jump in foreign direct investment, which rose 44.4% during 2017 to $35.88 billion according to government figures. HSBC facilitated these flows for a number of clients.

Notable deals included a $23 million seven-year financing for Malaysia’s HNG Capital, which wanted money for its Nam Tien Hydro Power Project. Then there was a $50 million credit facility, including a $40 million five-year term loan, for smartphone glass manufacturer Biel Crystal, which was making its first investment in the country.

Belt & Road projects also featured on the business roster, notwithstanding Vietnam’s millennia-old distrust of its larger northern neighbour. Chief among these was a $98 million seven-year syndicated loan for JA Solar, which is making a $1 billion Sinosure ECA-backed investment in the country.

Vietnam’s openness to foreign investment makes the country a strong one for HSBC’s global trade and receivables finance business. So strong, in fact, that Vietnam handles more business than any of the other nine countries HSBC operates in across Asia Pacific. 

Last year was also one when foreign investors made their presence felt in the stock market. HSBC is not active in the primary markets, but as of December 2017, it accounted for 50% of assets under custody in terms of listed equities and fund certificates owned by foreign institutional investors.

It also provided securities services when Jardine Cycle & Carriage purchased a 10% stake in Vinamilk in December 2017. In addition, HSBC completed the US$/VND FX spot conversion for the Singapore-listed group, underlining its equally strong FX market share, where it ranks fourth overall in the country behind the big three state-owned banks.

Finally, on the retail side, HSBC continues to be strongly embedded in the country. During 2017, it introduced the latest touch screen technology to all its ATMs. It also maintains a 13% market share with Visa cards in circulation, the number two market share.

With all three of its main business lines firing on all cylinders, the bank reported profit growth of 21.56% during the Financial Year to $78.3 million according to SNL. All of its efficiency ratios also improved, with its NIM rising from 3.27% to 3.49%, its cost to income ratio improving from 49.16% to 44.6% and NPLs falling from 1.32% to 0.88%, again according to SNL.


A growing and sharp uptick in business means this award will become ever more fiercely contest in the coming years. But banks which want to displace Credit Suisse will have a tough job on their hands since Vietnam is its crown jewel in a strong Asian frontier markets franchise.

During the period in question, Credit Suisse not only executed a large number of deals, but also demonstrated it had become a house bank to some of Vietnam’s increasingly dominant private sector corporations such as Vingroup, Masan and No Va Land. 

For example, when Vingroup spun off its retail malls, Credit Suisse was a joint global co-ordinator for the IPO, (known as international equity offerings, or IEOs, in Vietnam). The $742 million deal for Vincom Retail marked the 14th financing Credit Suisse had executed for Vietnam’s largest private sector corporation since 2009.

The IEO itself was a groundbreaker on a number of fronts and it also traded well in the secondary market despite being priced at VND40,600 per share, the top end of its indicative price range. By the end of the month, the stock was quoted at the VND52,000 level.

In addition to being Vietnam’s largest ever flotation at that time, Vincom Retail was also the first company to deploy a put-through-structure. This innovative feature allowed the lead managers to evade Vietnam’s notoriously months-long period between pricing and listing.

Credit Suisse was back at the helm when Vincom Retail returned to the equity markets early in 2018 with a $200 million block, which represented the largest overnight trade in Vietnamese history. This deal was also well received at the time, although it marked the high point for the stock price.

In total, Credit Suisse completed seven transactions during the awards period. The bank also demonstrated its ability to put its balance sheet to work since the majority of these deals were syndicated loans.

The bank cites a $150 million transaction for FE Credit as a particular highlight. The three-year deal was a debut one for Vietnam’s consumer finance company, but was successfully upsized by $50 million.

Other syndicated financings included an $80 million senior secured term loan for Home Credit, a $37.5 million refinancing for the same group and a $125 million unsecured term loan committed facility for No Va Land.

Rounding off the franchise, the Swiss bank also executed an undisclosed M&A transaction in the logistics sector in 2017.  

¬ Haymarket Media Limited. All rights reserved.
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