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VPBank to list on jittery main bourse next week

Vietnam's most profitable retail bank to debut despite banking crackdown

HO CHI MINH CITY -- The Vietnam Prosperity Joint Stock Commercial Bank, better known as VPBank, is to list on the Ho Chi Minh City Stock Exchange next week with an offering price of 39,000 dong ($1.72) despite the market entering some stormy times.

VPBank's offering price is higher than 10 other banks already listed on the country's bourses. The highest, Commercial Bank for Foreign Trade of Vietnam (Vietcombank), closed at 37,700 dong on Thursday. VPBank shares traded at 34,000 dong to 38,000 dong on the secondary Hanoi OTC market during the second quarter amid strong demand. Over 1.33 billion shares worth 52 trillion dong ($2.2 billion) will be offered on Aug. 17.

VPBank opened with charter capital of 20 billion dong in 1993, and developed into a leading retail bank with more than 200 branches and 18,000 employees. Loans to households and individuals made up 62% of the overall loan portfolio in 2016, and there are plans to raise this to around 80%.

VPBank shares are just over 41% privately held, and the rest by institutional investors. Foreign ownership is capped at 49%. The bank aims to place 15% of its shares with local and international investors in order to raise capitalization by around 40% to over 14 trillion dong from 10.7 trillion dong in June.

The bank posted 91% net profit growth in 2015 and 64% in 2016 to reach 3.9 trillion dong. In the first six months of this year, pretax profit rose 107% to 3.26 trillion dong, and 6.8 trillion dong is targeted for the full year. As of June, total assets stood at 248.7 trillion dong, up 8.7% year on year.

VPBank's debut is proceeding amid some serious market volatility. On Wednesday, Vietnam's benchmark VN Index dropped 17.92 points to 773.66 -- the biggest one-day loss since early last year -- after hitting a nine-year peak of 796.62 on Tuesday. The decline was triggered by a rumor that another prominent former banker had been arrested in connection with an ongoing $400 million graft case. Other banking officials have also been detained, creating uncertainty around 10 Vietnamese listed banks with a combined market capitalization of over 15 trillion dong.

Market jitters have also been aggravated by rising tensions between the U.S. and North Korea.

At the official opening of Vietnam's first derivatives market on Thursday in Hanoi, Deputy Prime Minister Vuong Dinh Hue urged investors to be "calm and confident in the tight and transparent market."

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