According to the Hanoi Stock Exchange (HNX), iWealth Investment Co Ltd reported a post-tax loss of VND32 billion for the first half of the year, leading to a stockholder equity decrease of 33 percent by the end of the second quarter compared with early this year to $66.3 billion.

iWealth showed its weak financial capability in late June 2023 with total debts higher by 68 times than its stockholder equity. This means that the company still incurred debts of VND4.54 trillion.

The current ratio of outstanding bond debts is 11.3x. The company had total bond debts of VND750 billion by mid-2023. The two lots of bonds - HBDCB2124001 and HBDCB2124002 – were issued in 2021.

Both of these were known as ‘three nos’ bonds: non-convertible, no warrants, and no collateral. They were all purchased by a securities company and credit institution.

The bonds have relatively high interest rates, about 9 percent. In April 2023, iWealth announced changes of conditions for the HBDCB2124001 lot of bonds. However, on August 22, iWealth bought back all the VND300 billion of bonds in circulation.

The iWealth’s move of buying back bonds was done after many companies redeemed their bonds to ease their debts and improve financial indicators.

For iWealth, the high financial cost could be a reason, while its activities of supporting financial services are unsatisfactory. And even commercial banks are facing difficulties.

The overnight interest rates in the interbank market has recently been hovering around 0.14-0.16 percent per annum, the lowest since early 2021. Meanwhile, the credit growth rate is very low, 5.56 percent, by September 15.

iWealth is a business operating primarily in the field of financial services support. Formerly known as Hoa Binh Debt Trading Company Limited (HBDC), established in 2012 in Long An, the company changed its name to iWealth Investment Co Ltd with headquarters in Hanoi.

Demand low

Also, according to HNX, Fe Credit reported a loss of VND3 trillion in the first half of the year instead of profits of several trillion dong as seen previously.

Shinhan Finance has also reported a loss of VND246 billion in the first half, which was a contrast to the post-tax profit of VND92 billion it gained the same period last year.

Other finance companies are witnessing unsatisfactory business results. Home Credit, for example, had post-tax profit of VND211 billion, while its stockholder equity was VND6.6 trillion.

HD Saison, an arm of HDBank, made a pre-tax profit of VND314 billion, down 48 percent over the same period last year. Its outstanding loans decreased by VND1.25 trillion compared to early this year to VND15.590 trillion. Meanwhile, MCredit reported a pre-tax profit decrease of 32 percent to VND410 billion.

A record high loss, VND368 billion, has been reported by F88, which meant a loss of VND2 billion a day, though the company is continuing to expand its network.

Analysts say that the Vietnamese consumer finance market has been quiet over the last year, and that the boom period is over. 

People’s incomes have decreased in the difficult period. It is not easy to invest. The real estate market is weak. Securities prices fluctuate as listed companies are facing difficulties. Many export companies have reported slow sales abroad.

In 2019-2021, many finance companies prospered thanks to strong cash flow and increased consumer demand. In 2022, F88 reported a record high profit of VND200 billion with a high capital use efficiency of over 30 percent. Some finance companies reported huge profits of trillions of dong.

In this period of hot development, many enterprises issued corporate bonds in large quantities to expand business. However, amid the bond crisis, businesses have reduced their reliance on this capital channel.

FiinRatings estimated that the circulating bond market has fallen from the peak of VND1.5 quadrillion in mid-2022 to VND923 trillion by the end of August 2023.

Manh Ha