LPBank fosters credit growth

LPBank experienced high credit growth in the first quarter of 2024, leading the industry.

Brand Changes

Before we get into business operations, there is one important shift at LPBank: its brand identity. Originally called LienVietBank in 2008, it was renamed LienVietPostBank when Vietnam Post became a strategic shareholder in 2011. The bank's prior English name, LienVietPostBank, was shortened to LPBank in 2023.

At the 2024 Annual General Meeting (AGM), a proposal was adopted to alter the bank's name to Loc Phat Vietnam Joint Stock Commercial Bank, with the "Lien Viet" word removed altogether. However, the English abbreviation "LPBank" was kept.

In comparison to previous AGM approvals, LPBank has changed its full English name three times since 2023, with the 2024 change occurring quickly, demonstrating the bank's flexibility before officially proceeding with the licensing process by the State Bank of Vietnam, possibly to balance or internationalize its significance.

Opinions on the new name "Loc Phat" differ. According to LPBank's management, it represents growth, fortune, luck, success, and thriving. According to branding experts, frequent and quick name changes may cost the bank's time and money in terms of increasing customers' brand awareness and memory. Nonetheless, the term "Loc Phat" is relevant, memorable, and relatable to the majority of Vietnamese, albeit its widespread use may make trademark protection and avoiding brand conflicts more challenging. This name change might be viewed as a deliberate move by the business as it enters a new phase.

Accelerating loans

According to LPBank, in the first quarter of 2024, the outstanding loans reached 307.708 trillion VND, up 11.71% from the end of 2023; deposits increased by 6.72% to 304.531 trillion VND. In the banking system, this growth rate is much greater than the industry average of 1%.

Furthermore, LPBank outperformed other banks with above-average credit growth, including TCB (6.01%), NCB (5.2%), OCB (4.61%), STB (3.05%), ACB (2.89%), and big retail banks VPB (0.6%) and VIB (0.43%). This is especially striking when contrasted to banks with negative credit growth, such as MBB, SHB, TPB, and ABB, which had a severe fall of -19.98%...

Looking back to 2023, LPBank's credit climbed by 16.8%. As a result, by the first quarter of 2024, the bank had already met more than two-thirds of its loan growth objective from the previous year. The mid-term financial report for the first quarter of 2024 showed a post-tax profit of 2,298,661 million VND, up 85% from the same period in 2023.

Regarding LPBank's credit growth, Mr. Ho Nam Tien, CEO of LPBank, claimed that it was principally due to: (1) improvements in both global and domestic economic conditions, with many individuals and enterprises starting to recover and requiring greater working capital for production and commercial operations. The bank granted loans to assist the national economy, resulting in a rise in net interest revenue over the previous year. (2) An growth in export orders for manufacturing firms resulted in a greater demand for foreign finance. The bank supplied foreign currency services to satisfy the actual demands of businesses, resulting in higher revenue from foreign exchange transactions. (3) LPBank launched new products and improved payment services both locally and abroad, resulting in a rise in service-related revenue.

Despite various hurdles expected in 2024, LPBank has set a pre-tax profit target of 10,500 billion VND, approximately 50% more than in 2023. LPBank also intends to issue shares to current shareholders, increasing its charter capital to 33.576 trillion VND.

Given the industry's difficulty in absorbing loans, it's unclear how LPBank intends to accomplish credit expansion given the reported capital structure. In addition, the bank's strategy for maintaining credit quality in a context of rising bad debts needs to be seen.