SHB requests tax exemption after merger

Saigon-Hanoi Commercial Joint Stock Bank (SHB) proposed that the State Bank consult with the Ministry of Finance to exempt 100% of income tax for 3 years from 2013 to 2015 as proposed in the HBB merger project...

On October 24, SHB successfully held the 2015 extraordinary shareholders' meeting. The meeting approved many important issues, including the merger of Vinaconex-Viettel Finance Joint Stock Company (VVF) into SHB with a high percentage of votes in favor.

Accordingly, SHB will issue an additional 100 million shares equivalent to VND1,000 billion to convert all VVF shares at a ratio of 1:1 (1 VVF share for 1 SHB share, par value VND10,000/share), bringing SHB's charter capital to VND10,486 billion, SHB's total assets in 2015 reached VND200,000 billion, profit VND1,120 billion. After the merger, SHB will restructure VVF into a one-member limited liability consumer credit finance company under SHB.

SHB will issue an additional 100 million shares equivalent to 1,000 billion VND to convert all VVF shares at a ratio of 1:1.

Regarding the expected business plan, after the merger, this Company will achieve a total pre-tax profit of 68 billion VND in 2016, 139.2 billion VND in 2017, and 191.2 billion VND in 2018, effectively contributing to SHB's overall business activities.

SHB said that before submitting the extraordinary shareholders' meeting to approve the merger, over the past 3 years SHB has carefully calculated and studied VVF's operations and researched the consumer credit financial market. As of June 30, 2015, VVF's total assets reached nearly VND1,230 billion, pre-tax profit reached VND13.4 billion. With the support of major shareholders such as Viettel and Vinaconex, VVF's financial situation was healthy before the merger. Although the bad debt ratio as of June 30, 2015 was 35%, the total outstanding debt was low, so the absolute value was only VND57 billion.

In order to cooperate to exploit the huge potential of the consumer financial services market, SHB proposed that the State Bank approve SHB to seek foreign strategic partners to buy shares or enter into joint ventures with SHB Consumer Finance Company after a period of operation with the maximum holding ratio as prescribed by law.

Notably, SHB proposed that the State Bank consult with the Ministry of Finance to exempt 100% of income tax for 3 years (2013-2015) as proposed in the project to merge Habubank (HBB) into SHB; exempt 100% of corporate income tax for 2 years (2016 and 2017), of which 50% of tax is exempted as proposed in the project to merge HBB into SHB, 50% of tax is exempted after receiving the merger of VVF).

In addition, this bank proposed that the State Bank submit to the Government permission for SHB to allocate provisions for VAMC special bonds issued before 2015 within 10 years according to the Bank's financial capacity from the date of bond issuance; allocate provisions for special bonds issued from 2015 onwards within 10 years according to SHB's financial capacity from the date of bond issuance; the State Bank shall not add bad debts from loans, investment trusts, and VVF bonds when performing credit institution rating or when calculating other licensing conditions according to the State Bank's regulations.

It is known that at the time of merger in August 2012, SHB had charter capital of nearly 9,000 billion VND, total assets of over 120,000 billion VND, 240 branches and transaction offices nationwide and 2 SHB branches in Cambodia and Laos, nearly 5,000 employees. By September 30, 2015, SHB's scale had increased significantly: Total assets reached 183 trillion VND, charter capital reached 9,486 billion VND, profit reached 702 billion VND, market share of mobilization and lending grew remarkably. The banking network was continuously expanded with 420 branches, transaction offices, ATMs nationwide, 2 foreign branches with a total staff of approximately 6,000 employees.

From over 8% after the merger with HBB in 2012, SHB's bad debt ratio as of June 30, 2015 decreased to 2.48%, lower than the 3% rate prescribed by the State Bank.

According to Hanoimoi