Vietnam International bank (VIB) has just announced the first quarter 2020 financial result with total revenue reached VND2.260 billion, profit before tax of the bank was VND1.075 billion.
But, the market has knocked VIB into the ranks of the truly cheap stocks in Q1/2020 among the listed banks in Vietnam. As of April 23rd 2020, its price is just VND14,500 (USD0.62) per share and its market liquidity is quite low with 353,550 shares traded.
Some investors tend to avoid these names entirely. But other investors love cheap stocks. In many cases, they see opportunity in these often battered shares, and some people simply prefer to buy their stocks in “lots” (typically 100 shares at a time) – something that’s a little more difficult to do with the triple- and quadruple-digit crowd.
For VIB, we believe the bank will outperform its peers during the economic weakness brought on by the COVID-19 pandemic.
Here’s why!
Stable business growth
According to the report on VIB’s website, total revenue of the bank in quarter I was VND2.260 billion, of which service revenue reached VND411 billion, accounting for 18%. Operating expenses reached VND1.029 billion. The bank saw a rise in cost to income ratio to 46%. Profit before tax was VND1.075 billion. From the beginning of the year, VIB has promptly taken actions on cost-cutting and actively participated in a program to prevent Covid-19, set up by the State bank of Vietnam and the Government. The bank’s leader has proactively reduced salaries to support customers.
Maintain a strong balance sheet in the context of market volatility
As of March 31, 2020, total assets of the bank reached VND193 trillion, while outstanding credit balance reached VND135 trillion, up 4% compared to the beginning of the year. Non-performing loans stood at 1.8% without bad debts at VAMC. With a tight and flexible risk appetite, the bank has maintained prudential ratios and safety ratios, of which Basel II capital adequacy ratio of 9.5% compared to the minimum requirement of 8%, the loan-to-deposit ratio was 76.5% compared to the ceiling of 85% and the ratio of short-term capital used for medium and long-term loans was at 35% compared to the ceiling of 40% regulated by SBV.
VIB’s asset quality once again was confirmed when it became the first bank in Viet Nam to announce the completion of Basel II three pillars on December 19, 2019. In the first quarter, VIB also continued to reaffirm its capacity and reputation through IFC trade finance limit increasing to US$144 million.
The leading bank in service and online utilities
With a view to supplying convenient and safe transactions for customers amid the Covid-19 pandemic, VIB actively contributes solutions to evolve a non-cash society under the direction of the Government. In the light of pioneering payment technology and superior features, VIB customers can experience online payments easily, conveniently and in a short time. As a result, VIB is the top 3 banks with the highest online card spending in Viet Nam.
In the first quarter of 2020, VIB continues to invest in Big Data and AI technologies to implement solutions to optimize online spending via credit cards for individual customers with a simplified credit card approval process, especially fast online approval within 30 minutes; shorten the waiting time for using card to 3-4 hours; more utilities such as up to 6% cash-back for online transactions, discounts up to 50% and 0% interest installment. Since the beginning of March, VIB has applied a free policy for customers when making online transfer transactions to encourage cashless transactions.
During the Covid-19 pandemic, outstanding incentives, convenient experience, secure payment and optimal security are the main reasons that promote customers to switch to card payments, Internet banking and mobile application of VIB. Compared to the same period of 2019, the number of new VIB credit cards opened in the first quarter increased by more than 40%, the number of transactions via credit cards increased by over 60%. By the end of the first quarter of 2020, VIB also recorded impressive growth of over 140% in terms of number and value of transactions via Internet Banking and MyVIB applications.
Protecting human health, keeping business continuity and ensuring social responsibility
As soon as the outbreak of Covid-19 occurred, to protect the health of employees and customers, VIB quickly established the steering committee on Covid-19 prevention, strongly communicated and instructed its employees to proactively prevent and protect themselves and the community; provided sufficient equipment such as masks, hand sanitizer, gloves and disinfection cabinets for employees and customers. VIB was also one of the first banks to offer free masks and hand sanitizers to all customers coming to the branch at the first appearance of Covid-19 in Viet Nam.
The bank has designed a business continuity plan (BCP), flexibly applied telecommuting to ensure smooth business in its branch network, the continuity and proactive approach in providing products and services to customers. At the same time, to increase investment in technology systems to support employees working from home and to help social distancing at workplaces. The bank reviewed all risk appetite, conducted stress tests and thoroughly implemented the savings and cost-cutting to enhance customer support and minimize the negative impact of the disease on business results.
VIB leaders said that, in addition to timely and practical support to customers, promoting non-cash payments, ensuring safe and smooth operation, VIB will always stand side by side with customers, partners, the State Bank and regulatory agencies to cushion the blow of Covid-19 on the life and the economy and prioritize all resources to maintain safe and sustainable business activities.
The reality is, low-priced stocks are a mix of high-return opportunity but also high risk. The crazy volatility introduced by the coronavirus outbreak certainly doesn’t help. Further complicating things is that many of them are largely ignored by the media, making information difficult to come by. So if you are going to take a moonshot, take a cue from the pros that routinely cover this bank.