What prospects for EIB?

The EIB officially announced the presence of a new group of shareholders in the bank.

Shareholder Movements

According to the bank's list of shareholders holding more than 1% of EIB shares as of July 1, 2024, Gelex Corporation owns over 85.5 million shares, or 4.90% of charter capital; VIX Securities owns over 62.3 million shares, or 3.58% of charter capital; and Thang Phuong Joint Stock Company owns over 53.3 million shares, or 3.07% of charter capital. Two individual shareholders, Ms. Le Thi Mai Loan and Ms. Luong Thi Cam Tu, own 1.03% and 1.12% of the charter capital, respectively. In addition, an associate of Ms. Le Thi Mai Loan has about 19,500 shares, or 0.0011% of the charter capital.

Aside from Gelex, Thang Phuong JSC and Ms. Le Thi Mai Loan's involvement as stockholders are noteworthy due to their ties to Bamboo Capital. This explains Ms. Loan's role as Deputy General Director, as well as the increased presence of Mr. Nguyen Ho Nam, former Chairman of Bamboo Capital, who has been appointed as an advisor to the Board of Directors and Vice Chairman of the Board at EIB.

It should be noted that Ms. Luong Thi Cam Tu, who was previously the Chairman of the Board of Directors of EIB, has contacts with Nam A Bank and was seen as a possible leader at Sacombank. Mr. Nguyen Ho Nam also served as the Chairman of the Board of Directors for Sacombank Securities JSC.

Thus, information concerning shareholder presence at the EIB reflects earlier moves. This transparency is one of the less unexpected parts of the EIB's shareholder structure, and it indicates hopes for a more stable leadership structure, removing one of the EIB's long-standing negative qualities until the end of 2022.

Credit and Profit Growth Expectations

According to business data for the first five months of 2024, the EIB's credit increased by 5.3% from the beginning of the year. According to MBS, EIB credit growth is expected to reach 9.9%/9.8% in 2024/2025, owing to (1) continued growth in wholesale and retail lending (accounting for 36% of EIB's lending structure in 2023); (2) a recovery in real estate credit as the real estate market is expected to warm up beginning in Q4; and (3) expected growth in SME lending due to attractive interest-rate loan packages.

According to the Q2/2024 financial statement, EIB's net interest income, the bank's primary source of revenue, climbed by 38% year on year, totaling roughly VND 1,512 billion. Pre-tax earnings in the second quarter of 2024 topped VND 813 billion, increasing 52% year on year. The EIB's profit variance report noted that, despite international and domestic challenges, the bank made substantial efforts and achieved certain accomplishments.

It is well known that the EIB is one of the banks actively promoting preferential loan packages to attract customers, such as the VND 5,000 billion E-Fast credit package, with a fixed interest rate of 5.25% per year throughout the loan term for SMEs, or the real estate loan package, with a preferential interest rate of 6% per year and loans up to 85% of asset value.

Mr. Nguyen Hoang Hai, Acting General Director of EIB, added that on the business side, the bank is strengthening its response to the need for working capital loans, supplemented according to the business seasonality of each industry. However, there are also instances where businesses meeting EIB's loan standards secure loans and then use this as a basis to obtain low-interest loans elsewhere. According to Mr. Hai, the bank does not prioritize competition at all costs but focuses on quality and loyal customers.

In actuality, Mr. Hai's viewpoint is pretty near, as indicated by the EIB's Q1 business results, which show an increase in bad debts, with the value of these debts growing by 12.7% compared to the previous quarter and 37.9% year on year, mostly due to commercial clients. In the first quarter of 2024, the EIB's bad debt coverage ratio declined to 37.3%. Improving this index is vital, as is aligning with the EIB's better NIM.

In 2024, EIB targets a pre-tax profit of VND 5,180 billion, up 90.4% year-on-year. Other indicators are also expected to grow, notably credit balance reaching VND 161,000 billion, up 14.6% year-on-year, and non-performing loans on total credit balance controlled at 1.8%. With these targets, EIB needs a significant leap in the full Q2 business results report, comparable to and exceeding the system's capital push (6%) in the last days of Q2, as well as seizing the opportunity of recovering capital demand to increase lending significantly.

MBS projects EIB's pre-tax profit in 2024 and 2025 to grow by 11.3%/15.4% year-on-year, thanks to net interest income growth of 17%/15% year-on-year and continued improvement in NIM in 2024/2025.