LienVietPostBank mortgages Gov't bonds for a $50 million loan
By Minh An
August 30, 2018 | 03:00 PM GMT+7
The total value of these Government bonds is around VND1.45 trillion, equivalent to $62.3 million, higher than the value of a loan offered by JP Morgan Chase to LienVietPostBank.
LienVietPostBank announced that the Bank and JPMorgan Chase Bank’s Singapore branch have entered $50-million credit contract with a three-year term.
The loan will help LienVietPostBank supplement mid- and long-term foreign currency, improve the mobilization structure and partially meet the foreign currency demand of domestic enterprises.
The loan also enhances the position of LienVietPostBank in domestic and international financial markets.
"The $50 million loan from JPMorgan Chase Bank will help LienVietPostBank integrate further into the international financial market," said Pham Doan Son, General director of LienVietPostBank at the signing ceremony.
However, to get a $50 million loan, LienVietPostBank had to mortgage seven Government bonds that the bank bought in the bond issuance of the State Treasury.
Representatives of LienVietPostBank and JPMorgan Chase signed the $50-million credit contract
Moreover, LienVietPostBank also has to mortgage all rights and profits related to these bonds, bond interest as well as the proceeds from the sale of these bonds in the future.
These Government bonds were issued in 2016 and 2017 with a five-year term, which will mature in 2021 and 2022.
LienVietPostBank has not disclosed the interest rate of the $50-million loan offered by JP Morgan Chase Bank. In the domestic market, USD mobilizing rates are commonly zero per cent per annum (p.a) as regulated by the State Bank. Besides, USD lending rates are 2.8 – 4.7 per cent p.a for short-term and 4.5 – 6.0 per cent p.a for medium and long-term loans.
LienVietPostBank is considered as the commercial bank with the largest network of more than 360 branches, transaction offices and over 1,000 post offices in Viet Nam, covering all cities and provinces nationwide.
However, the bank’s current business performance is not encouraging as the general trend of the banking sector. In the first half of 2018, LienVietPostBank reported a pre-tax profit of VND618 billion ($26.5 million), down 32 per cent year on year. Recently, the bank has reduced its pre-tax profit target from VND1.8 trillion ($77.4 million) to VND1.2 trillion ($51.6 million).
According to the bank's leaders, the bank has to make provision for securities investment due to bad developments on the stock market. At the same time, the bank’s network expansion has rocked up its operating costs.
According to the bank’s semi-annual report in 2018, its total assets reached nearly VND175.9 trillion ($7.56 billion), a 7.62-per cent increase compared to the beginning of the year. In particular, customer loans accounted for over VND114.5 trillion ($4.92 billion), up 14 per cent compared to the beginning of the year.
In the first half of 2018, the bank also mobilized around VND18 trillion ($774 million), raising the total deposits to VND146.3 trillion ($6.29 billion). In addition, LienVietPostBank has recently issued more than VND4 trillion ($172 million) worth of other valuable papers to increase its capital.
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