Sacombank issued three bond tranches in the last week of July, one totaling 2,230 billion VND, according to data from the Hanoi Stock Exchange.
These bonds carry a 6-year maturity and a fixed annual interest rate of 10%. This rate marks a significant increase from Sacombank's previous bond issuances a month prior and is nearly three percentage points higher than some long-term savings deposit products.
The 10% rate significantly surpasses the 8.5% average interest rate for banking sector bonds in the first half of this year. Before Sacombank, VietBank offered 9.7% for the first term of its bond issuance, consisting of a 5.9% reference rate and a 3.8% margin.
These new bond tranches are part of Sacombank's broader plan to offer 20,000 billion VND in private placement bonds. The bank stated this initiative aims to "strengthen its capital buffer, increase risk resilience, and reflect a prudent management philosophy." The actual issuance value will depend on capital needs, market conditions, and investor interest.
Beyond their higher interest rates compared to deposits of similar maturities, bank bonds appeal to investors due to several other factors, according to experts.
Nguyen Thao Hanh, Deputy Head of Research and Investor Services at FiinRatings, notes that banks generally have higher credit ratings than businesses and operate under strict management and supervision by the State Bank of Vietnam. Consequently, bank bonds align with the conservative preferences of many investment funds, securities companies, and insurance firms.
Sacombank's decision to offer a 10% fixed bond interest rate reflects its need for medium to long-term capital, particularly as retail deposit mobilization has shown slow growth. By the end of Quarter II, customer deposits at the bank increased by only 4.8% compared to the beginning of the year.
Sacombank targets 8,100 billion VND in pre-tax profit this year, a 6% increase from last year. This goal stems from its focus on strengthening the provision buffer amid increasing market risks.
Management stated their priority is risk provisioning to increase bad debt coverage, rather than pursuing rapid short-term growth. Provisions in the first half of the year were seven times higher than the same period last year. This significantly eroded pre-tax profit, reducing it to 4,000 billion VND, nearly half of the figure from the first six months of last year.
By the end of June, Sacombank's total assets exceeded 882,000 billion VND, a nearly 3% decrease from the beginning of the year. Concurrently, credit grew by 1.5% to over 636,000 billion VND.
Phuong Dong
