Saigon-Hanoi Commercial Joint Stock Bank announces new SGD 3Y (3.10% IPG) and 5Y (3.40% IPG) notes

• Saigon-Hanoi Commercial Joint Stock Bank ("SHB") intends to issue new SGD benchmark-sized dual-tranche 3-year and 5-year senior unsecured social notes, with initial price guidance ("IPG") of 3.10% and 3.40%, respectively. The Credit Guarantee and Investment Facility ("CGIF") guarantees the notes, with settlement on 20 October 2026. The 3Y note matures on 20 October 2029, while the 5Y note matures on 20 October 2031. Net proceeds are earmarked for lending to micro, small and medium enterprises (MSMEs) under SHB's Sustainable Finance Framework. The expected issue rating is AA by S&P, well above SHB's own issuer ratings of B1 / BB- (Moody's / Fitch), due to the guarantee by the AA-rated CGIF.

• The notes’ AA rating rests on the guarantee from CGIF, a trust fund of the Asian Development Bank (“ADB”) backed by the ASEAN+3 governments and the ADB, with paid-in capital of US$1.158B. S&P rates CGIF AA (Stable) and describes its financial risk profile as “extremely strong”, supported by robust capital and liquidity. CGIF also has a record of honouring its guarantees: when Malaysia’s KNM Group defaulted in 2021, CGIF paid bondholders in full and on time.

• SHB is one of Vietnam’s five largest private joint-stock commercial banks and has been designated a systemically important bank by the State Bank of Vietnam (central bank of Vietnam; SBV). SHB runs a corporate-led universal banking model across six segments: Corporate Banking, Retail Banking, Financial Institutions and Transaction Banking, Investment Banking, Markets and Treasury, and Digital Banking.

• For the six months ending 30 June 2026 (1H26), SHB reported consolidated profit before tax of VND9.1T (~USD360M), up 1.6% YoY and meeting 51% of its 2026 target of VND17.7T (~USD700M; +18% YoY under its base scenario). The headline masks a sharp shift in the bank’s earnings mix. Net interest income fell 17% YoY to VND12.2T (~USD480M) despite 7.3% loan growth year-to-date, pointing to significant margin compression; SHB does not disclose its net interest margin. This was offset by net service (fee) income nearly quadrupling (+277% YoY) to VND3.8T (~USD150M), which lifted total operating income 4.9% YoY to VND17.2T (~USD680M). SHB did not provide a breakdown of what drove the surge in fees, so its durability is the key moving forward: if fees normalise, net interest income has to recover for SHB to meet its full-year target.

• Cost discipline remains a clear strength for the bank. Operating expenses were around VND2.7T (~USD110M) in 1H26, bringing the cost-to-income ratio down to 15.9% (FY25: 22.1%), already the lowest among Vietnamese private-sector bank peers in 2025. This supported pre-provision operating profit of VND14.4T (~USD570M; +5.4% YoY). Credit provisions absorbed around VND5.4T (~USD210M) of this in 1H26 (an annualised credit cost of roughly 1.7% of loans, on our estimates). Provisioning remains the main swing factor for earnings going forward.

• Asset quality has been improving for SHB. Non-performing loans (NPLs), loans more than 90 days overdue, fell 6.2% year-to-date to VND13.7T (~USD540M), bringing the consolidated NPL ratio (SBV’s basis) down to 1.76% (end-2025: 1.95%). The mix has shifted, however. Large corporate NPLs fell to 1.2% of that segment’s loans (end-2025: 2.1%). SME NPLs rose to 1.2% of SME loans (end-2025: 0.7%), more than doubling to VND3.2T (~USD130M). Retail NPLs, the weakest segment, edged up to 7.2% of retail loans (end-2025: 7.0%), or VND7.8T (~USD310M). Real estate is also the largest sector exposure at around 33.5% of loans, double its 2023 share. With the net proceeds earmarked for MSME lending, which SHB reports within its SME segment, further SME book growth could add to SME NPLs as these loans season. That said, the 1.76% NPL ratio leaves a comfortable buffer against the SBV’s 3% threshold and is within management’s target of below 2% for 2026.

• SHB’s capital adequacy ratio (“CAR”) stood at 11.81% on a bank-only basis as of 30 June 2026 (around 12% consolidated, under Basel II’s standardised approach), comfortably above the SBV’s 8% minimum. It was down from 12.62% at the end of 2025 as risk-weighted asset growth outpaced capital, with total capital at VND98.3T (USD3.9B). Capital should strengthen further. In 1H26, SHB raised around VND9–10T (~USD0.36–0.40B) of new equity, which had yet to be reflected in its end-June capital ratio. It also expects around VND2.0T (~USD0.08B) from selling its remaining stake in consumer finance arm SFinance in 2H26. On our estimates, these could lift its capital ratio to around 13%. SHB also plans to adopt stricter Basel III capital rules in 2027-2028, which should improve disclosure and bring it closer to international banking peers.

• Liquidity is sound but leaves limited room for faster lending. Customer deposits grew 9.1% year-to-date to VND624.3T (~USD24.8B) and fund around 65% of the balance sheet, with retail customers accounting for 69.3% of deposits. The liquidity reserve ratio of 17.06% sits well above the 10% minimum. The bank-only loan-to-deposit ratio, however, has risen to 80.62% (FY25: 78.54%) against the SBV's 85% ceiling, so loan growth under SHB's 10.5% 2026 credit quota will need to be matched by continued deposit growth.

• On a standalone basis, SHB is a single-B, high-growth Vietnamese bank with an industry-leading cost base, improving headline asset quality and a strengthening capital position, offset by pressure on net interest income, a sizeable real estate book and rising SME and retail NPLs. For investors in these new SGD issues, though, the relevant credit is CGIF's AA guarantee, which places the notes in a very different category from SHB's own ratings.

• In Table 1 below, we compare these new SGD issues against existing SGD bonds guaranteed by CGIF as well. Our analysis takes account of the 3.10% and 3.40% IPG, although we expect the final price guidance (FPG) to come in below these levels. Overall, these new SHB issues will offer a decent yield pickup of 60+bps over similar-tenor peers, while providing an attractive yield spread of 100+bps over comparable Singapore treasuries.

• On balance, we see the 3.10% IPG and 3.40% IPG as attractively priced, given CGIF’s guarantee. Investors seeking high-quality income backed by a strong guarantor can consider these new issues. 

Table 1: Peer Comparison

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.