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Dear Valued Shareholders, Partners and Investors,
As you may already be aware, the COVID-19 pandemic has become complicated across the globe despite efforts being made by governments and medical units. Amid this emergency, Việt Nam has taken solid measures against the pandemic with the involvement of the entire political system to achieve the “double targets” of aggressively preventing and containing the pandemic whilst resolving problems incurred, enabling production and business, and supporting people’s livelihoods and social security to fulfill the socioeconomic goals and missions set for this year.
As an integral part of society, the State Bank of Việt Nam (SBV) promptly issued legal documents such as Circular 01/2020/TT-NHNN, Directive 02/CT-NHNN and Telegram 03/CĐ-NHNN which have become the legal basis for credit institutions and finance companies to support affected customers in a timely manner. Practical solutions include flexible regulation of monetary policy and interest rates, loan restructuring, interest reductions and waivers, maintenance of the loan bucket, simultaneous interest rate reductions to support manufacturing and business, and payment fee reductions and waivers.
Proactively responding to the situation, 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 about how 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 programmes to ensure operational safety.
- Conducted stress testing in light of various scenarios.
- Formulated internal and external communication plans to encourage staff, customers, business partners and the community to join hands in pandemic prevention.
- Reviewed cost optimisation 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 for the prevention of the pandemic
- VPBank and FE Credit have donated VNĐ15 billion in total; VPBank employees have also donated half a day’s salary for the fight against COVID-19.
- The “Cheer up Việt Nam” 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” programme, 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 by up to 1.5 per cent for distressed corporate customers, while 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 had launched a second programme offering a 2 per cent interest rate cut for corporate customers with good repayment histories and credit profiles.
- For retail customers, VPBank has a applied maximum reduction of 3% on initial interest rates for a period of 3 to 6 months depending on each loan package. FE Credit has also offered preferential packages including exemptions of up to 10 per cent of accrued interest for the installment period or partial interest exemption for customers in loan groups 2, 3, 4 and 5.
- As of the beginning of April 2020, a number of VPBank’s retail and corporate customers had applied for debt restructuring due to the impacts of COVID-19. However, such customers and their outstanding balances account for only an insignificant proportion of the Bank’s portfolio. Therefore, the impacts on the Bank are relatively minor. As of now, the impacts of COVID-19 on the bank’s credit portfolio have yet to register, but VPBank has made preparations 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 preferential programmes including free inter-bank real-time transfers, up to 0.2% discounts on interest rates per year for online savings in most tenures, and discounts of 10 – 25 per cent on various e-commerce platforms. By the end of the first quarter of 2020, transaction volume and number of transactions increased 25 per cent and 50 per cent year-on-year respectively.
- $NAP application and the advanced technology platform developed by FE Credit have facilitated easier lending and convenient cashless spending without direct contact with sales staff.
Despite the initial impacts of COVID-19, VPBank recorded a positive performance in the first quarter of 2020 in terms of consolidated credit growth, total operating income and profit. In view of the complicated developments, the full-year business targets in 2020 will certainly be challenging for VPBank.
As of now, several scenarios have been developed for the most effective business and operation solutions. VPBank expects an optimistic scenario in which the pandemic in Việt Nam and other countries is contained by the end of the second quarter of 2020 and people’s daily lives and economic activities return to normal. This will be an opportunity for production and business to bounce back, so the Bank should regain its growth momentum. In the scenario where the pandemic lasts until Q3 or later and the economy continues to stagnate, VPBank will aim at securing capital adequacy, asset quality, and stable income as well as cost optimisation 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 the post-COVID-19 period.
VPBank believes that under the Government’s leadership, with the solidarity and determination of all businesses and Vietnamese people to overcome hardships, Vietnam is among the countries that remains attractive for investments. VPBank’s Board of Directors and Board of Management are 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 this difficult time.
Thank you for your continuous support for VPBank and may good health and safety always be with you and your families!
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