Hoa Phat debt rises, Vietcombank exposure near 29T dong
Hoa Phat Group has nearly 30 trillion dong of long-term debt outstanding with Vietcombank, underscoring how the Vietnamese steel giant is leaning more heavily on bank funding just as financing costs and foreign-exchange pressure climb.
The company’s total borrowings and finance lease liabilities reached almost 98.53 trillion dong at the end of June, up nearly 9% from the end of March and 7% from the start of the year. That debt pile now equals about 35% of Hoa Phat’s funding sources, or roughly 0.7 times equity, making interest expense a bigger drag on earnings even as the group keeps cash on hand at nearly 37.26 trillion dong.
Short-term debt remains the larger burden at 71.43 trillion dong, or more than 72% of total borrowings. Of that, about 49.18 trillion dong is denominated in dong and 12.61 trillion dong in U.S. dollars, with the dollar balance having more than tripled from the start of the year, a sign the company is taking on more currency risk at a time when global borrowing costs remain elevated.
On the long-term side, Hoa Phat reported 36.74 trillion dong in debt based on original contract tenor, including 9.64 trillion dong due within 12 months and 27.10 trillion dong due later. Vietcombank is the biggest lender in that bucket with nearly 28.94 trillion dong outstanding, followed by VietinBank’s Hanoi branch at more than 4.76 trillion dong.
The scale of bank exposure matters because Hoa Phat is one of Vietnam’s most systemically important industrial borrowers. Its long-term funding is spread across Vietcombank, VietinBank, HSBC, VIB, BIDV, Woori and Shinhan, backed by deposits, inventories, fixed assets and construction-in-progress projects, tying the health of the steel cycle directly to the country’s banking system.
Rising borrowing costs are already showing up in the income statement. In the first half, Hoa Phat booked 2.85 trillion dong in interest expense, 2.7 times a year earlier, while total financial costs climbed 95% to nearly 3.80 trillion dong after foreign-exchange losses. The group still generated 876 billion dong from deposits and lending, but that only partially offset the pressure.
For investors in HPG.VN and in Vietcombank, the message is the same: leverage is rising faster than financial flexibility. The next focus will be whether Hoa Phat can keep cash flow strong enough to absorb higher interest costs and currency swings if global funding conditions stay tight.
| Entity | Gains | Losses |
|---|---|---|
| Hoa Phat | ▲Large funding for operations | ▼Higher interest and FX costs |
| Vietcombank | ▲Nearly 29 trillion dong loan exposure | ▼Concentration risk to a big borrower |
| Other lenders | ▲Secured industrial lending | ▼Lower room for balance-sheet flexibility |
| HPG shareholders | ▲Cash-backed expansion capacity | ▼Margin pressure from rising leverage |