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Q2 2013
www.businessmonitor.com
VIETNAM COMMERCIAL BANKING REPORT
INCLUDES 5-YEAR FORECASTS TO 2017
ISSN 1758-454X Published by:Business Monitor International
Vietnam Commercial Banking
Report Q2 2013
INCLUDES 5-YEAR FORECASTS TO 2017
Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: February 2013
Business Monitor International
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© 2013 Business Monitor International
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DISCLAIMER
All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor
International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as
to the accuracy or completeness of any information hereto contained.
Vietnam Commercial Banking Report Q2 2013
CONTENTS
BMI Industry View ............................................................................................................... 7
Table: Levels (VNDbn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table: Levels (US$bn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table: Levels At May 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table: Annual Growth Rate Projections 2012-2017 (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table: Ranking Out Of 62 Countries Reviewed In 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table: Projected Levels (VNDbn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table: Projected Levels (US$bn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SWOT .................................................................................................................................... 9
Commercial Banking .................................................................................................................................. 9
Business Environment .............................................................................................................................. 10
Economic ............................................................................................................................................... 11
Industry Forecast .............................................................................................................. 13
Speeding Up Banking Reforms .................................................................................................................. 14
Foreign Investors Could Remain Cautious .................................................................................................. 15
Industry Risk Reward Ratings .......................................................................................... 16
Asia Commercial Banking Risk/Reward Ratings ............................................................................................ 16
Table: Asia Commercial Banking Business Environment Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Market Overview ............................................................................................................... 18
Asia Commercial Banking Overview ........................................................................................................... 18
Table: Banks' Bond Portfolios 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Table: Asia Commercial Banking Business Environment Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Table: Anticipated Developments in 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Table: Comparison of Total Assets & Client Loans & Client Deposits (US$bn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Table: Comparison of US$ Per Capita Deposits (2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table: Interbank Rates and Bond Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Economic Outlook ................................................................................................................................... 25
Ratings Downgrade Failed To Surprise Investors ......................................................................................... 26
Early Signs Of A Recovery ...................................................................................................................... . 28
Threat Of Slower Growth Yet To Undermine Efforts For Reforms .................................................................... 28
Expenditure Breakdown .......................................................................................................................... 28
Table: Vietnam - Economic Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Competitive Landscape .................................................................................................... 30
Market Structure ..................................................................................................................................... 30
Protagonists .......................................................................................................................................... 30
Table: Protagonists In Vietnam's Commercial Banking Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
© Business Monitor International Page 4
Vietnam Commercial Banking Report Q2 2013
Definition Of The Commercial Banking Universe ......................................................................................... 30
List Of Banks ......................................................................................................................................... 31
Table: Financial Institutions In Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Company Profile ................................................................................................................ 34
Bank for Foreign Trade of Vietnam (Vietcombank) ........................................................................................ 34
Table: Stock Market Indicator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Table: Balance Sheet (VNDmn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Table: Balance Sheet (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
VietinBank ............................................................................................................................................. 38
Table: Stock Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Table: Balance Sheet (VNDmn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Table: Balance Sheet (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Agribank ............................................................................................................................................... . 42
Table: Balance Sheet (VNDmn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Table: Balance Sheet (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Asia Commercial Bank ............................................................................................................................. 45
Table: Stock Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Table: Balance Sheet (VNDmn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Table: Balance Sheet (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Eximbank ............................................................................................................................................... 48
Table: Stock Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Table: Balance Sheet (VNDmn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Table: Balance Sheet (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Vietnam Technological and Commercial Joint-stock Bank (Techcombank) ......................................................... 52
Table: Balance Sheet (VNDmn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Table: Balance Sheet (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Viet A Joint Stock Commercial Bank (Vietabank) ........................................................................................... 55
Housing Development Commercial Joint Stock Bank (HDBank) ....................................................................... 57
Sacombank ............................................................................................................................................. 59
Table: Stock Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Table: Balance Sheet (VNDmn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Table: Balance Sheet (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Regional Overview ............................................................................................................ 63
Asia Overview .................................................................................................... ..................................... 63
Investment Banking Revenues Surge .......................................................................................................... 64
Malaysia Takes The Lead ........................................................................................................................ 65
Thai Commercial Banks Targeting High-Growth Economies .......................................................................... 66
Global Industry Overview .................................................................................................. 67
© Business Monitor International Page 5
Vietnam Commercial Banking Report Q2 2013
Global Commercial Banking Overview ........................................................................................................ 67
Table: Selected Highlights Of Changes To The Formulation of the Basel III Liquid Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Demographic Forecast ..................................................................................................... 71
Table: Vietnam's Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Table: Vietnam's Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Table: Vietnam's Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Methodology ...................................................................................................................... 75
Commercial Bank Business Environment Rating ......................................................................................... 76
Table: Commercial Banking Business Environment Indicators And Rationale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Weighting ............................................................................................................................................. 78
Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
© Business Monitor International Page 6
Vietnam Commercial Banking Report Q2 2013
BMI Industry View
Liabilities and
capital
3,117,942
Total assets
3,117,942
Client loans
2,630,220
Bond portfolio
223,644
Client deposits
2,241,245
Date
May 2011
Other
264,078
Capital
494,104
Other
382,593
Change, % 13.7% 7.8% 58.9% 34.4% 13.7% 15.3% 19.1% -19.6%
Source: BMI; Central banks; Regulators
Liabilities and
capital
151.76
Total assets
151.76
Client loans
128.02
Bond portfolio
10.89
Client deposits
109.09
Date
May 2011
Other
12.85
Capital
24.05
Other
18.62
Change, % 12.0% 6.1% 56.4% 32.3% 12.0% 13.5% 17.2% -20.8%
Source: BMI; Central banks; Regulators
Loan/deposit ratio
106.26%
Loan/asset ratio
79.97%
Loan/GDP ratio
n.a.
GDP Per Capita, US$
1,072.13
Deposits per capita, US$
1,433.70
Source: BMI; Central banks; Regulators
© Business Monitor International Page 7
Falling Falling Falling n.a. n.a.
Table: Levels At May 2012
May 2012 169.90 135.87 17.03 17.00 169.90 27.29 127.86 14.75
Table: Levels (US$bn)
May 2012 3,545,801 2,835,610 355,354 354,837 3,545,801 569,584 2,668,471 307,746
Table: Levels (VNDbn)
Vietnam Commercial Banking Report Q2 2013
Assets
11
Loans
9
Deposits
6 Annual Growth Rate
Ranking 15 22 35
Source: BMI; Central banks; Regulators
Loan/deposit ratio
11
Loan/asset ratio
2
Loan/GDP ratio
14
14 16 22
Source: BMI; Central banks; Regulators
2009
2,286,321
2010
2,953,153
2011
3,437,893
2012e
3,816,061
2013f
4,350,310
2014f
4,959,353
2015f
5,604,069
2016f
6,276,557
2017f
6,966,979 Total assets
Client deposits 1,680,717 2,209,896 2,483,357 2,706,859 2,977,545 3,245,524 3,505,166 3,750,528 3,975,560
e/f = estimate/forecast. Source: BMI; Central banks; Regulators
2009
123.73
2010
151.46
2011
163.44
2012e
181.41
2013f
209.15
2014f
241.16
2015f
275.66
2016f
312.27
2017f
348.35 Total assets
Client deposits 90.95 113.34 118.06 128.68 143.15 157.82 172.41 186.59 198.78
e/f = estimate/forecast. Source: BMI; Central banks; Regulators
© Business Monitor International Page 8
Client loans 101.16 126.96 134.54 146.64 166.09 188.15 211.26 235.05 257.48
Table: Projected Levels (US$bn)
Client loans 1,869,260 2,475,540 2,829,890 3,084,580 3,454,730 3,869,297 4,294,920 4,724,412 5,149,609
Table: Projected Levels (VNDbn)
Local currency asset growth Local currency loan growth Local currency deposit growth
Table: Ranking Out Of 62 Countries Reviewed In 2013
CAGR 13 11 8
Table: Annual Growth Rate Projections 2012-2017 (%)
Vietnam Commercial Banking Report Q2 2013
SWOT
Commercial Banking
Strengths Untapped potential. ■
High savings rate of the Vietnamese people. ■
Increasingly open to foreign banks since WTO accession in 2007. ■
The role of state-owned banks is decreasing. ■
Weaknesses Domestic banks lack capital and technology to sustain high credit and efficient
growth.
■
The financial accounts of many banks are still opaque. ■
Small banks have a high exposure to real estate and stock market loans. ■
Opportunities The population is still underbanked. ■
Income levels likely to rise strongly over the medium term. ■
Threats Macroeconomic instabilities threaten the credibility of the government and could
potentially drive economic policy away from further liberalisation.
■
The high level of government debt could crowd out the private sector and potentially
trigger a fiscal crisis.
■
© Business Monitor International Page 9
Vietnam Commercial Banking SWOT
Vietnam Commercial Banking Report Q2 2013
Business Environment
Strengths Vietnam has a large, skilled and low-cost workforce, which has made the country
attractive to foreign investors.
■
Vietnam's location - its proximity to China and South East Asia, and its good sea links
- makes it a good base for foreign companies to export to the rest of Asia and
beyond.
■
Weaknesses Vietnam's infrastructure is still weak. Roads, railways and ports are inadequate to
cope with the country's economic growth and links with the outside world.
■
Vietnam remains one of the world's most corrupt countries. According to
Transparency International's 2012 Corruption Perceptions Index, Vietnam ranks 123rd
out of 176 countries.
■
Opportunities Vietnam is increasingly attracting investment from key Asian economies, such as
Japan, South Korea and Taiwan. This offers the possibility of the transfer of high-tech
skills and know-how.
■
Vietnam is pressing ahead with the privatisation of state-owned enterprises and the
liberalisation of the banking sector. This is likely to offer foreign investors new entry
points.
■
Threats Ongoing trade disputes with the US, and the general threat of American
protectionism, which will remain a concern.
■
Labour unrest remains a lingering threat. A failure by the authorities to boost skills
levels could leave Vietnam a second-rate economy for an indefinite period.
■
© Business Monitor International Page 10
SWOT Analysis
Vietnam Commercial Banking Report Q2 2013
Economic
Strengths Vietnam has been one of the fastest-growing economies in Asia in recent years, with
GDP growth averaging 7.1% annually between 2000 and 2011.
■
The economic boom has lifted many Vietnamese out of poverty, with the official
poverty rate in the country falling from 58% in 1993 to 14.0% in 2010.
■
Weaknesses Vietnam still suffers from substantial trade, current account and fiscal deficits, leaving
the economy vulnerable to global economic uncertainties in 2012. The fiscal deficit is
dominated by substantial spending on social subsidies that could be difficult to
withdraw.
■
The heavily-managed and weak currency reduces incentives to improve quality of
exports, and also keeps import costs high, contributing to inflationary pressures.
■
Opportunities WTO membership has given Vietnam access to both foreign markets and capital,
while making Vietnamese enterprises stronger through increased competition.
■
The government will in spite of the current macroeconomic woes, continue to move
forward with market reforms, including privatisation of state-owned enterprises, and
liberalising the banking sector.
■
Urbanisation will continue to be a long-term growth driver. The UN forecasts the
urban population rising from 29% of the population to more than 50% by the early
2040s.
■
Threats Inflation and deficit concerns have caused some investors to re-assess their hitherto
upbeat view of Vietnam. If the government focuses too much on stimulating growth
and fails to root out inflationary pressure, it risks prolonging macroeconomic
instability, which could lead to a potential crisis.
■
Prolonged macroeconomic instability could prompt the authorities to put reforms on
hold as they struggle to stabilise the economy.
■
© Business Monitor International Page 11
SWOT Analysis
Vietnam Commercial Banking Report Q2 2013
Industry Forecast
BMI View: Efforts by the State Bank of Vietnam (SBV) to recapitalise ailing banks and strengthen
regulatory oversight have helped to fend off a full-blown banking crisis for now. We believe that investors
are increasingly confident of the government's ability to contain the risk of a banking crisis while Vietnam's
bullish long-term growth story remain intact.
Our long-held view that concerns over an impending collapse of Vietnam's banking system are largely
unwarranted and that the government is unlikely to require assistance from the International Monetary Fund
(IMF) to finance a bailout, is slowly being vindicated (see 'Keeping A Cautious Outlook Amid Rising NPLs',
September 17 2012). Efforts by the State Bank of Vietnam (SBV) to rapidly recapitalise ailing banks and
strengthen regulatory oversight of lending practices have helped to fend off a full-blown banking crisis for
now. Meanwhile, average lending rates have fallen from around 20% in the beginning of 2012 to around
14% at the time of writing, and we expect credit conditions to continue to improve over the coming months.
Confidence Is Returning
Vietnam - Ho Chi Minh Stock Index (VNI)
Source: BMI, Bloomberg
© Business Monitor International Page 13
Vietnam Commercial Banking Report Q2 2013
Using the benchmark Ho Chi Minh Stock Index (VNI) as a gauge for sentiment on the overall economy (see
chart), we believe that investors are increasingly confident of the government's ability to contain the risk of
a banking crisis while Vietnam's bullish long-term growth story remain intact. Fitch Ratings
also reaffirmed Vietnam's long-term foreign and local currency debt ratings at 'B+' in January, citing the
country's strong growth potential, favourable environment for attracting foreign direct investment (FDI),
and manageable external debt levels relative to the region. From our perspective, progress on banking sector
reforms will continue to play a crucial role in further bolstering investor confidence going forward. This
should in turn determine the strength of the economic recovery over the coming quarters (we forecast real
GDP growth to accelerate from 5.0% in 2012 to 7.0% in 2013).
Credit Conditions To Pick Up In 2013
Vietnam - Outstanding Credit, VNDbn (LHS) & % chg y-o-y (RHS)
Source: BMI, State Bank of Vietnam
Speeding Up Banking Reforms
We are optimistic that the government will meet its target of restructuring ailing banks by the end of 2013,
mainly through efforts to recapitalise banks with weak balance sheets and merging smaller banks that are
struggling to compete effectively. The urgent need to restructure the banking sector and reinstate confidence
has also helped to speed up progress on free-market initiatives such as allowing for greater foreign
participation and privatising other state-owned enterprises (SOEs). According to a report published by The
© Business Monitor International Page 14
Vietnam Commercial Banking Report Q2 2013
Wall Street Journal, the government may soon allow foreign investors to hold a 49% stake in state-owned
banks or even larger stakes conditional upon an agreement to divest holdings at a later stage (presently,
foreign companies are allowed to hold a maximum 20% stake as a single entity, or 30% with a partner).
A joint Financial Sector Assessment Program undertaken by the World Bank and IMF is scheduled to be
completed by the end of H113, and is expected to provide greater transparency regarding the actual level of
non-performing loans (NPLs) across the banking sector. Estimates provided by the SBV currently put NPLs
at close to 9.0% of total outstanding loans as of the end of 2012 and it is widely expected that the actual
figure could be significantly higher. In any case, we believe that the assessment program will provide a
good framework for the government to further improve transparency and accounting standards going
forward.
Foreign Investors Could Remain Cautious
We expect this process of restructuring the banking sector to keep earnings depressed for the foreseeable
future and we maintain a cautious outlook on the banking sector through 2013. We view FDI inflows into
the banking sector as a crucial element of the restructuring process and we highlight the downside risk that
foreign investors may avoid participating in large-scale privatisation of state-owned banks. Given the
uncertainties surrounding the true exposure of NPLs, we expect foreign investors to remain highly cautious
in taking up stakes in smaller state-owned banks. However, as the economic recovery gathers pace and
assuming that actual NPLs are in line with current expectations, we expect FDI inflows into the banking
sector to pick up gradually over the course of the year.
© Business Monitor International Page 15
Vietnam Commercial Banking Report Q2 2013
Industry Risk Reward Ratings
Asia Commercial Banking Risk/Reward Ratings
Business Environment Rating Methodology
Since Q108, we have described numerically the banking business environment for each of the countries
surveyed by BMI. We do this through our Commercial Banking Business Environment Rating (CBBER), a
measure that ensures we capture the latest quantitative information available. It also ensures consistency
across all countries and between the inputs to the CBBER and the Insurance Business Environment Rating,
which is likewise now a feature of our insurance reports. Like the Business Environment Ratings calculated
by BMI for all the other industries on which it reports, the CBBER takes into account the limits of potential
returns and the risks to the realisation of those returns. It is weighted 70% to the former and 30% to the
latter.
The evaluation of the 'Limits of potential returns' includes market elements that are specific to the banking
industry of the country in question and elements that relate to that country in general. Within the 70% of the
CBBER that takes into account the 'Limits of potential returns', the market elements have a 60% weighting
and the country elements have a 40% weighting. The evaluation of the 'Risks to realisation of returns' also
includes banking elements and country elements (specifically, BMI's assessment of long-term country risk).
However, within the 30% of the CBBER that take into account the risks, these elements are weighted 40%
and 60%, respectively.
Further details on how we calculate the CBBER are provided at the end of this report. In general, though,
three aspects need to be borne in mind in interpreting the CBBERs. The first is that the market elements of
the 'Limits of potential returns' are by far the most heavily weighted of the four elements. They account for
60% of 70% (or 42%) of the overall CBBER. Second, if the market elements are significantly higher than
the country elements of the 'Limits of potential returns', it usually implies that the banking sector is (very)
large and/or developed relative to the general wealth, stability and financial infrastructure in the country.
Conversely, if the market elements are significantly lower than the country elements, it usually means that
the banking sector is small and/or underdeveloped relative to the general wealth, stability and financial
infrastructure in the country. Third, within the 'Risks to the realisation of returns' category, the market
elements (i.e. how regulations affect the development of the sector, how regulations affect competition
within it, and Moody's Investor Services' ratings for local currency deposits) can be markedly different from
BMI's long-term risk rating.
© Business Monitor International Page 16
Vietnam Commercial Banking Report Q2 2013
Limits of Potential Returns Risks to Potential Returns Overall
Market Structure Country Structure Market Risks Country Risks Rating Ranking
China 93.3 57.5 63.3 74.0 76.2 14
India 83.3 57.5 60.0 54.0 68.0 30
Japan 33.3 77.5 66.7 80.0 58.1 36
Pakistan 43.3 50.0 53.3 42.0 46.2 57
Singapore 66.7 95.0 96.7 90.0 82.4 6
South Korea 80.0 85.0 83.3 76.0 81.1 8
Thailand 66.7 65.0 86.7 74.0 69.9 22
United States 93.3 85.0 100.0 80.0 89.4 2
Scores out of 100, with 100 the highest. Source: BMI
© Business Monitor International Page 17
Vietnam 60.0 55.0 36.7 48.0 53.6 47
Taiwan 76.7 72.5 86.7 76.0 76.6 13
Sri Lanka 23.3 55.0 33.3 46.0 37.5 59
Philippines 50.0 62.5 60.0 58.0 56.1 41
Malaysia 73.3 80.0 83.3 80.0 77.6 10
Indonesia 76.7 65.0 80.0 52.0 69.4 27
Hong Kong 80.0 92.5 73.3 78.0 82.3 7
Bangladesh 50.0 45.0 43.3 44.0 46.7 55
Table: Asia Commercial Banking Business Environment Ratings
Vietnam Commercial Banking Report Q2 2013
Market Overview
Asia Commercial Banking Overview
Bond Portfolio, US$bn Bond as % total assets Year-on-year growth %
Bangladesh 17.1 23.0 19.3
Hong Kong 350.0 19.8 3.4
Indonesia 17.3 4.3 17.7
Malaysia 67.9 12.5 3.1
Philippines 35.4 23.7 -4.3
Sri Lanka 2.2 12.8 22.2
Taiwan 98.0 8.4 -47.2
Vietnam 12.3 7.5 27.0
Source: Central banks, regulators, BMI
© Business Monitor International Page 18
United States 447.1 3.6 -15.1
Thailand 65.5 15.9 13.7
South Korea 271.5 17.0 4.6
Singapore 76.5 11.6 5.5
Pakistan 33.5 38.5 56.1
Japan 3,407.8 30.8 7.5
India 292.3 25.2 7.9
China 1,577.7 8.7 -4.2
Table: Banks' Bond Portfolios 2011
Vietnam Commercial Banking Report Q2 2013
Limits of Potential Returns Risks to Potential Returns Overall
Market Structure Country Structure Market Risks Country Risks Rating Ranking
China 93.3 57.5 63.3 74.0 76.2 14
India 83.3 57.5 60.0 54.0 68.0 30
Japan 33.3 77.5 66.7 80.0 58.1 36
Pakistan 43.3 50.0 53.3 42.0 46.2 57
Singapore 66.7 95.0 96.7 90.0 82.4 6
South Korea 80.0 85.0 83.3 76.0 81.1 8
Thailand 66.7 65.0 86.7 74.0 69.9 22
United States 93.3 85.0 100.0 80.0 89.4 2
Scores out of 100, with 100 the highest. Source: BMI
© Business Monitor International Page 19
Vietnam 60.0 55.0 36.7 48.0 53.6 47
Taiwan 76.7 72.5 86.7 76.0 76.6 13
Sri Lanka 23.3 55.0 33.3 46.0 37.5 59
Philippines 50.0 62.5 60.0 58.0 56.1 41
Malaysia 73.3 80.0 83.3 80.0 77.6 10
Indonesia 76.7 65.0 80.0 52.0 69.4 27
Hong Kong 80.0 92.5 73.3 78.0 82.3 7
Bangladesh 50.0 45.0 43.3 44.0 46.7 55
Table: Asia Commercial Banking Business Environment Ratings
Vietnam Commercial Banking Report Q2 2013
Loan deposit ratio %
92.6
Loan/Asset ratio %
67.1
Loan/GDP ratio %
54.6
Rank
36
Trend
Falling
Rank
14
Trend
Falling
Rank
40
Trend
Rising Bangladesh
Hong Kong 67.5 57 Rising 37.3 58 Rising 260.5 2 Falling
Indonesia 83.0 42 Rising 61.7 23 Rising 35.2 54 Rising
Malaysia 77.7 47 Falling 58.6 36 Rising 124.9 11 Rising
Philippines 76.9 52 Rising 56.8 41 Rising 36.8 52 Rising
Sri Lanka 79.7 44 Falling 60.4 31 Falling 30.1 55 Rising
Taiwan 80.7 46 Rising 63.8 25 Rising 163.9 5 Rising
Vietnam 116.0 14 Rising 79.4 2 Falling 102.8 14 Falling
Source: Central banks, regulators, BMI
© Business Monitor International Page 20
United States 107.1 20 Falling 77.0 6 Rising 64.8 34 Rising
Thailand 106.9 23 Falling 64.8 20 Falling 81.9 23 Rising
South Korea 114.4 12 Falling 72.0 10 Rising 103.7 15 Falling
Singapore 92.0 30 Rising 52.3 42 Rising 135.0 8 Rising
Pakistan 59.8 60 Falling 41.3 49 Falling 20.5 58 Falling
Japan 69.3 54 Falling 47.9 45 Falling 92.4 19 Rising
India 77.1 49 Rising 66.1 15 Falling 52.5 44 Rising
China 74.9 50 Rising 50.8 43 Falling 124.6 10 Falling
Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios, 2013
Vietnam Commercial Banking Report Q2 2013
Loan/Deposit Ratio, %
Loan Growth, US$bn
Deposit Growth, US$bn
Residual, US$bn Trend
Bangladesh 91.4 Falling 32.2 37.0 -4.8
Hong Kong 68.2 Rising 131.4 174.7 -43.3
Indonesia 84.4 Rising 167.4 178.6 -11.2
Malaysia 77.3 Falling 178.6 238.2 -59.6
Philippines 77.6 Rising 36.4 34.1 2.3
Sri Lanka 79.2 Falling 6.5 8.6 -2.1
Taiwan 82.8 Rising 212.3 199.4 12.9
Vietnam 119.2 Rising 53.6 39.8 13.9
NB Incorporates estimated economic data and projected banking data. Source: Central banks, regulators, BMI
© Business Monitor International Page 21
United States 108.1 Falling 1,959.9 2,059.6 -99.7
Thailand 106.9 Falling 68.4 68.5 -0.1
South Korea 112.5 Falling 224.0 252.7 -28.8
Singapore 95.8 Rising 132.8 122.3 10.5
Pakistan 59.3 Falling 5.7 20.9 -15.3
Japan 69.0 Falling 297.5 610.8 -313.3
India 75.8 Falling 545.8 719.7 -174.0
China 74.2 Rising 2,148.5 2,212.0 -63.5
Table: Anticipated Developments in 2014
Vietnam Commercial Banking Report Q2 2013
2013
Client Loans
2012
Client Loans Total Assets Client Deposits Total Assets Client Deposits
China 21,482.9 10,912.7 14,561.4 21,312.4 10,621.8 14,040.8
India 1,617.1 1,068.3 1,385.3 1,274.1 841.7 1,110.0
Japan 12,246.5 5,869.7 8,464.8 11,395.7 5,569.0 7,937.8
Pakistan 107.8 44.6 73.0 95.3 42.8 65.4
Singapore 766.0 401.0 436.0 748.7 399.6 408.5
South Korea 1,710.1 1,231.7 1,076.7 1,772.9 1,276.9 1,096.2
Thailand 493.2 319.5 298.8 461.6 297.6 279.6
United States 13,995.5 10,772.4 10,057.7 13,203.3 10,020.9 9,312.7
Source: Central banks, regulators, BMI
© Business Monitor International Page 22
Vietnam 209.1 166.1 143.2 181.4 146.6 128.7
Taiwan 1,316.4 840.1 1,040.5 1,265.8 788.8 1,000.4
Sri Lanka 33.3 20.1 25.2 29.1 17.6 21.9
Philippines 181.0 102.7 133.7 170.5 91.2 125.3
Malaysia 747.2 437.8 563.4 610.9 357.9 456.5
Indonesia 532.3 328.5 395.7 452.8 284.2 339.4
Hong Kong 1,949.0 727.3 1,076.7 1,821.2 673.3 1,006.1
Bangladesh 104.6 70.2 75.8 89.1 59.8 63.7
Table: Comparison of Total Assets & Client Loans & Client Deposits (US$bn)
Vietnam Commercial Banking Report Q2 2013
Client Deposits, per capita
455
Rich 20% Client Deposits, per capita
1,965
Poor 80% Client Deposits, per capita
123
GDP Per Capita
823 Bangladesh
Hong Kong 38,384 99,984 592,065 37,004
Indonesia 3,817 1,329 6,403 400
Malaysia 10,966 14,696 75,660 4,729
Philippines 2,860 1,047 5,450 341
Sri Lanka 3,129 940 4,721 295
Taiwan 21,773 36,059 178,643 11,165
Vietnam 1,782 1,832 6,316 395
Source: Central banks, regulators, BMI
© Business Monitor International Page 23
United States 52,233 33,823 126,315 7,895
Thailand 5,613 4,616 17,266 1,079
South Korea 24,358 25,253 88,296 5,518
Singapore 56,049 75,638 329,000 20,562
Pakistan 1,222 243 1,594 100
Japan 50,260 46,457 267,991 16,749
India 1,596 838 4,346 272
China 6,544 8,028 42,848 2,678
Table: Comparison of US$ Per Capita Deposits (2013)
Vietnam Commercial Banking Report Q2 2013
3 Month Interbank Rate %
Current Account % of GDP, 2013f
Budget balance % of GDP, 2013f
End Q3 2012
China 2.4 -1.7 3.67
India -3.6 -9.8 8.72
Japan 0.8 -9.8 0.19
Pakistan -2.0 -6.6 9.53
Singapore 14.4 1.4 0.33
South Korea 2.2 1.2 2.84
Thailand 2.2 -3.0 3.13
United States -3.0 -6.8 0.32
NB Incorporates actual financial markets data; estimated economic data and projected banking data. na=not available. Source: Central banks; regulators; BMI
© Business Monitor International Page 24
Vietnam 0.0 -5.0 8.35
Taiwan 7.0 -2.7 0.87
Sri Lanka -5.7 -6.3 12.65
Philippines 3.4 -2.1 1.00
Malaysia 7.7 -5.4 3.20
Indonesia -2.1 -2.5 4.91
Hong Kong 2.4 4.9 0.40
Bangladesh 1.5 -4.6 n/a
Table: Interbank Rates and Bond Yields
Vietnam Commercial Banking Report Q2 2013
Economic Outlook
BMI View: Vietnam's economy remains on track for a robust recovery in 2013, and we view consensus
estimates on growth as being overly pessimistic. The latest credit downgrade by rating agency Moody's
Investors Service has failed to surprise the bond markets and we believe that this is because concerns over
the build-up of bad debt in the banking sector have long been priced by investors. Furthermore, latest
economic indicators also support our view that economic conditions in Vietnam are improving and we are
maintaining our view that real GDP growth will come in strong at 7.0% in 2013.
Latest data published by the General Statistics Office (GSO) showed that Vietnam's real GDP growth
accelerated from 4.7% year-on-year (y-o-y) in Q212 to 5.4% in Q312, reinforcing our view that the
economy is poised for a robust recovery as we head into 2013. It is worthwhile to note, however, that the
general consensus remain deeply cautious towards the country's economic outlook. According to the latest
Bloomberg survey consisting of 11 economists, the median forecast for Vietnam's real GDP growth for
2013 currently stands at 5.8% while the mean forecast averaged slightly higher at 6.2%. This, in comparison
to our forecast for the Vietnamese economy to grow by a heady 7.0% in 2013, highlights the degree of
pessimism that the consensus presently holds - and what we view as an extreme in bearish macro sentiment.
© Business Monitor International Page 25
Vietnam Commercial Banking Report Q2 2013
Rebound In Sight
Vietnam - Real GDP, VNDbn (LHS) & % chg y-o-y (RHS)
Source: BMI, General Statistics Office
Ratings Downgrade Failed To Surprise Investors
Interestingly, Vietnam's foreign and local currency debt ratings were downgraded on September 28 by
ratings agency Moody's Investors Service from B1 to B2, citing lower growth prospects and risks to the
state balance sheet from weakness in the banking system. The latest downgrade places Vietnam's credit
rating five notches below investment grade, on par with countries such as Egypt and Cambodia. We see the
downgrade as coming somewhat behind the curve. We have been warning of a surge in bankruptcies since
the beginning of the year and the government has responded speedily by tightening supervision over the
banking sector and introducing reforms to merge ailing banks. Furthermore, we believe that the worst case
scenario of a banking crisis has already been contained.
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Vietnam Commercial Banking Report Q2 2013
Muted Response To Credit Downgrade
Vietnam - Two-Year & 10-Year Government Bond Yields, % & Spread, bps
Source: BMI, Bloomberg
Indeed, judging from the muted response in the bond markets following the ratings downgrade, it appears
that the risks of a potential bailout of ailing banks by the Vietnamese government have long been priced in
by investors. As the accompanying chart shows, 10-year Vietnamese sovereign bond yields have remained
largely stable within a narrow trading range of 10.25-10.50% in recent months. Yields on two-year
sovereign bonds have begun to tick up in recent weeks, following a higher-than-expected reading on
© Business Monitor International Page 27
Vietnam Commercial Banking Report Q2 2013
inflation in September (headline consumer price inflation accelerated from 5.0% y-o-y in August to 6.5% in
September, after recording 13 consecutive monthly declines since August 2011). However, looking at the
broader trend for bond yields (where yields have fallen substantially from the peak of around 12.5-13.0% to
current levels of around 10.0%), we believe that the recent uptick in yields do not warrant cause for alarm.
Early Signs Of A Recovery
Looking at more recent economic data, we point out that industrial production expanded by 9.7% y-o-y in
September, a significant increase from 4.4% in August and the fastest rate of expansion since February.
Retail sales for the first nine months of the year also grew by a robust 17% y-o-y, suggesting to us that
domestic demand is also starting to pick up. These factors reinforce our view that economic conditions in
Vietnam are improving and the economy is on track for a swift recovery over the coming quarters.
Accordingly, we are maintaining our view that real GDP growth will come in strong at 7.0% in 2013, and
we believe that signs of an improving economic outlook over the coming months will soon reignite bullish
sentiment towards Vietnam's growth prospects.
Threat Of Slower Growth Yet To Undermine Efforts For Reforms
Rapid credit growth and reckless lending practices among local banks have resulted in a build up of bad
debt over the years, fuelling concerns among investors that reigniting economic growth will prove to be a
challenging task in 2013. The economic slowdown in 2011 led by aggressive monetary tightening by the
SBV, resulted in a surge in NPLs and prompted banks to aggressively cut down on lending to small-and-
medium sized enterprises (SMEs). Growing evidence that real GDP growth could miss the government's
target of 6.0-6.5% in 2012 has so far failed to derail the SBV's efforts to push ahead reforms - an
encouraging sign that the government is willing to tolerate slower growth in return for macroeconomic
stability.
Over the longer term, we expect this restructuring of the banking sector alongside efforts to speed up the
privatisation of state-owned enterprises (SOE), to boost the quality of economic growth in Vietnam.
Although these reforms are unlikely to witness a smooth process, we should nonetheless see a more
efficient banking system that would allow real GDP growth to average at a robust 7.1% over the next
decade. A more efficient credit system should also see consumer price inflation averaging a benign 5.3%
over the same period.
Expenditure Breakdown
Private Consumption: We expect private consumption to grow at a relatively subdued pace of 4.9% in
2012 before accelerating towards 5.6% in 2013. However, we note that the risk of a sustained collapse in
© Business Monitor International Page 28
Vietnam Commercial Banking Report Q2 2013
exports and further bankruptcies among SMEs, could potentially lead to widespread job losses in export-
driven sectors. Uncertainties over the outlook for employment could in turn prompt households to cut back
on spending.
Gross Fixed Capital Formation: We foresee a significant pickup in private sector investment growth in
2013. We believe with lending rates will gradually ease over the coming months as the effect of recent rate
cuts by the SBV begins to kick in. Accordingly, we expect gross fixed capital formation growth to
accelerate from 4.3% in 2012 to 5.6% in 2013.
Public Spending: We expect total public spending to remain relatively resilient in 2013, expanding at a
respectable pace of 5.4%. However, there is limited room for the government to increase spending further
due to concerns over the need to finance a potential bailout of ailing state-owned commercial banks.
Net Exports: Net exports remain the biggest downside risk to our outlook for the Vietnamese economy
given that we expect external demand to remain sluggish as we head into H113. Despite recording an
average monthly trade surplus of US$172mn since June 2012 (resulting in a year-to-date surplus of US
$77mn), we do not see the case for a substantial pickup in external demand in the near term. Accordingly,
we expect exports to expand at a moderate pace of 6.5% in 2013.
2010 2011 2012e 2013f 2014f 2015f 2016f
Nominal GDP, VNDbn [2] 1,980,914.00 2,535,008.00 2,913,940.20 3,314,445.00 3,776,223.10 4,265,863.00 4,807,544.50
$bn [2] 103.5 122.7 138.5 159.3 183.6 209.8 239.2
Real GDP growth, % change y-o-y [2] 6.8 5.9 5.3 7.0 7.2 7.3 7.3
Population, mn [3] 87.8 88.8 89.7 90.7 91.6 92.4 93.3
Unemployment, % of labour force, eop 4 4.3 4.5 5.0 4.8 4.7 4.6 4.5
Notes: e BMI estimates. f BMI forecasts. 1 at 1994 prices. Sources: 2 Asian Development Bank, General Statistics Office; 3 World Bank/UN/BMI; 4 General Statistics Office.
© Business Monitor International Page 29
Industrial production index, % y-o-y, ave [1,4] 14.1 10.9 8.0 12.0 14.0 13.0 12.0
GDP per capita, US$ [2] 1,178 1,382 1,544 1,758 2,005 2,270 2,564
Nominal GDP, US
Table: Vietnam - Economic Activity
Vietnam Commercial Banking Report Q2 2013
Competitive Landscape
Market Structure
Protagonists
Central bank: State Bank of Vietnam (SBV)
www.sbv.gov.vn/en/home
The SBV implements the state management of currency trading, credit, payment, foreign exchange and banking; is the only bank authorised to issues bank notes; and acts as the bank to the banks and the state. The central bank organises the management of monetary policy and ensuring a stable currency value is its main objective.
www.sbv.gov.vn/en/home
Banking trade association: Vietnam Bankers Association (VNBA)
The VNBA was founded in 1994 and became a part of the ASEAN Bankers Association the following year, after Vietnam's accession to association. The functions of the VNBA are: to act as a link between the banks and the authorities, including dissemination of 'the policies, mechanisms and laws on banking operations' to its members; protecting the interests of the members; training and research; and expansion of international cooperation.
Definition Of The Commercial Banking Universe
The State Bank of Vietnam identifies six 'state-owned credit institutions' or 'state-owned commercial banks'
(SOCBs), 38 urban commercial joint stock banks (CJSBs), 32 branches of foreign banks and five joint
venture banks. There are also 17 finance companies and 54 representative offices of foreign banks. In terms
of the numbers of branches, VietinBank is the largest organisation, with a presence at 138 locations. The
other SOCBs also have large networks by local standards. Agribank has 115; BIDV, 103; VBSP, 65; VDB,
62; and MDHDB, 32. Of the urban CJSBs, the organisations which have over 25 branches are:
Maritime CJSB (26); Techcombank (38); VIB (42); Sacombank (59); Vietcombank (59); Eximbank
(35); Military Bank (36); ACB (54); Saigonbank (31); VP Bank (34); and EAB (28). None of the joint-
venture banks have more than five branches.
© Business Monitor International Page 30
www.vnbaorg.info
Among its other functions, the SBV is the regulator of the banking system.
Principal banking regulator: State Bank of Vietnam (SBV)
The SBV is the successor to the Vietnam National Bank, which was established by the government of North Vietnam in 1951. From 1975 to May 1990, the SBV was the banking system of Vietnam. The government then established the 'two- tier' system that is still in place. The financial liberalisation at the beginning of the 1990s lead to the establishment of four large state-owned commercial banks: Agribank, BIDV, Incombank and Vietcombank. This period also included the establishment of commercial joint-stock banks, joint-venture banks, branches or representative offices of foreign banks, credit cooperatives, people's credit funds and finance companies.
Table: Protagonists In Vietnam's Commercial Banking Sector
Vietnam Commercial Banking Report Q2 2013
List Of Banks
State-owned Commercial Banks
Vietnam Bank for Industry and Trade (VietinBank)
Mekong Delta Housing Development Bank
Bank for Investment and Development of Vietnam
Urban Joint-Stock Commercial Banks
Bac A Commercial Joint Stock Bank
Gia Dinh Commercial Joint Stock Bank
Kien Long Commercial Joint Stock Bank
LienViet Commercial Joint Stock Bank
My Xuyen
Nam A Commercial Joint Stock Bank
Bank for Foreign Trade of Vietnam
Housing Development Commercial Joint Stock Bank
Orient Commercial Joint Stock Bank
Vietnam International Commercial Joint Stock Bank
Saigon-Hanoi Commercial Joint Stock Bank
Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank)
© Business Monitor International Page 31
Pacific Commercial Joint Stock Bank
Saigon Bank for Industry and Trade
Saigon Commercial Joint Stock Bank
Military Commercial Joint Stock Bank
Southern Commercial Joint Stock Bank
Habubank
Vietnam Commercial Joint Stock Bank for Private Enterprise
Nam Viet Commercial Joint Stock Bank
Western Rural Commercial Joint Stock Bank
Vietnam Technological and Commercial Joint Stock Bank (Techcombank)
Maritime Commercial Joint Stock Bank
Global Petro Commercial Joint Stock Bank
An Binh Commercial Joint Stock Bank
Vietnam Development Bank
Vietnam Bank for Agricultural & Rural Development (Agribank)
Vietnam Bank for Social Policies
Table: Financial Institutions In Vietnam
Vietnam Commercial Banking Report Q2 2013
TienPhong Commercial Joint Stock Bank
Viet A Commercial Joint Stock Bank
Petrolimex Group Commercial Joint Stock Bank
South East Commercial Joint Stock Bank (SeABank)
Ocean Commercial Joint Stock Bank
Great Asia Commercial Joint Stock Bank
BaoViet Joint-Stock Commercial Bank
Foreign Bank Branches
Australia & New Zealand Banking Group (Australia)
Standard Chartered Bank (UK)
Chinfon Commercial Bank (Taiwan)
ABN AMRO Bank (Netherland)
Mizuho Corporate Bank (Japan)
Shinhan Bank (South Korea)
United Overseas Bank (Singapore)
Bank of China (China)
Mega International Commercial Bank (Taiwan)
Woori Bank (South Korea)
© Business Monitor International Page 32
JPMorgan Chase (US)
OCBC Bank (Singapore)
Bank of Tokyo-Mitsubishi UFJ (Japan)
Deutsche Bank (German)
HSBC (UK)
BNP Paribas (France)
Bangkok Bank (Thailand)
Maybank (Malaysia)
Citibank (US)
Calyon (France)
Natexis (France)
First Commercial Joint Stock Bank
Great Trust Commercial Joint Stock Bank
Eastern Asia Commercial Joint Stock Bank
Asia Commercial Joint Stock Bank
Vietnam Commercial Joint Stock Export-Import Bank
Viet Nam Thuong Tin Commercial Joint Stock Bank
Financial Institutions In Vietnam - Continued
Vietnam Commercial Banking Report Q2 2013
Korea Exchange Bank (South Korea )
Chinatrust Commercial Bank (Taiwan)
Far East National Bank (US)
Sumitomo-Mitsui Banking Corporation (Japan)
Taipei Fubon Bank (Taiwan)
Industrial Bank of Korea (South Korea)
Joint Venture Banks
Shinhanvina Bank
VinaSiam
Source: SBV, September 2010
© Business Monitor International Page 33
Vietnam-Russia Bank
VID Public Bank
Indovina Bank
Commonwealth Bank (Australia)
Hua Nan Commercial Bank (South Korea)
Cathay United Bank (Taiwan)
First Commercial Bank (Taiwan)
Lao-Viet Bank (Laos)
Financial Institutions In Vietnam - Continued
Vietnam Commercial Banking Report Q2 2013
Company Profile
Strengths Minority owner Mizuho has boosted bank's profile. ■
Largest correspondent network among Vietnamese banks. ■
Clear competence in external trade. ■
Strong market position. ■
Sharp increase in total assets during 2011. ■
Weaknesses Profit after tax declined during 2011. ■
• Lack of transparency.
Opportunities Stronger expansion to outpace growth at smaller, non-state rivals. ■
15% stake acquisition by Japan's Mizuho Corporate Bank. ■
Strong increase in loans to customers during 2011. ■
• Improving capital position.
Threats Tighter monetary policy to tame economic growth. ■
• Risk to asset quality on the back of difficult operating environment in 2012.
Company Overview Established in 1963 as a state-owned commercial bank, Vietcombank has paid-up
capital of VND3,955bn. It is the oldest commercial bank for external affairs in Vietnam
and was the first bank in the country to have a centralised capital management
structure. It describes itself as an 'interbank forex payment centre for over 100
domestic banks and foreign banks' branches operating in Vietnam', and was the first
commercial bank in the country to deal in foreign currencies. The bank's employees
rose from 11,415 in 2010 to 12,565 as of the end of 2011.
© Business Monitor International Page 34
Bank for Foreign Trade of Vietnam (Vietcombank)
Vietnam Commercial Banking Report Q2 2013
Vietcombank's operations have been supported by the largest correspondent network
among Vietnamese banks with more than 1,300 correspondent financial institutions in
over 90 countries and territories.
Vietcombank has expanded from its original role as North Vietnam's foreign trade bank
to become one of the country's largest universal banks. It is also an investor in a
number of other financial institutions, including Vietnam Export Import CJSB, Saigon
Industrial and Commercial CJSB, Gia Dinh CJSB, Military CJSB, International
Commercial CJSB, Oriental CJSB, Chohungvina Bank, Petroleum Insurance
Company and Golden Insurance Company.
Japan's Mizuho Corporate Bank acquired a 15% stake in Vietcombank for a total of
VND11.8trn (US$559.04mn) in January 2012, some months after the deal was revealed.
The acquisition, which advantageously gives Vietcombank a stronger foreign partner,
involved the sale of 347.61mn shares.
Corporate
Highlights
Consolidated profit before tax reached VND5,697bn in 2011, up 2.3% y-o-y compared
to the VND5,569bn recorded in 2010. Profit after tax was VND4,217bn, down marginally
from VND4,303bn. Total assets, meanwhile, stood at VND366,722bn as of December
31 2011, representing a 19.2% y-o-y increase from VND307,621bn in 2010. This also
exceeded the set target of a 15% increase set at the previous shareholders' General
Meeting.
Loans to customers came in at VND209,418bn as of the end of 2011, up 18.4% y-o-y
from VND176,814bn as of December 31 2010. The NPL/Gross loans ratio of 2011 was
2.03%. (2.83)
Standard & Poor's, encouraged by the acquisition, argued that Mizuho Corporate
Bank's involvement strengthened Vietcombank's capital position. The agency upgraded
its outlook on the bank's long-term rating to 'stable' from 'negative' in January 2012.
Company Address Vietcombank (Bank For Foreign Trade of Vietnam)
198 Tran Quang Khai
Hanoi
Vietnam
Description of Business: Leading commercial bank specialising project finance, trade
finance, treasury, financial market and international banking services.
Phone: +84 (4) 825 1322
Fax: +84 (4) 826 9067
http://www.vietcombank.com.vn
© Business Monitor International Page 35
Vietnam Commercial Banking Report Q2 2013
2008
n.a.
2009
56,874,044
2010
57,159,508
2011
42,941,740
24-Jan-13
63,033,744 Market Capitalisation VND
Share Price VND n.a. 32,384 29,018 21,800 27,200
Share Price, % change (eop) -15.1
Shares Outstanding (mn) 1,756 1,756 1,481 1,970 n.a.
Source: Bank of Foreign Trade of Vietnam (Vietcombank), Bloomberg
2006
166,952,016
2007
198,457,113
2008
221,950,448
2009
255,495,883
2010
307,621,338
2011
366,722,279 Total Assets
Total Deposits 119,778,872 143,401,576 157,067,019 169,427,776 204,755,949 227,016,854
Earnings per share (VND) n.a. n.a. 672 2,233 1,879 1,789
Source: Bank of Foreign Trade of Vietnam (Vietcombank), Bloomberg
2006 2007 2008 2009 2010 2011
Total Assets 10,398 12,390 12,695 13,826 15,777 17,436
Total Deposits 7,460 8,953 8,984 9,169 10,501 10,793
Earnings per share (US$) n.a. n.a. 0.04 0.13 0.10 0.09
Source: Bank of Foreign Trade of Vietnam (Vietcombank), Bloomberg
© Business Monitor International Page 36
Total Shareholders' Equity 698 917 795 910 1,070 1,368
Loans & Mortgages 4,219 6,089 6,208 7,414 8,783 9,703
Table: Balance Sheet (US$mn)
Total Shareholders' Equity 11,202,342 14,684,963 13,893,437 16,819,641 20,856,761 28,781,930
Loans & Mortgages 67,742,520 97,531,864 108,528,764 136,996,006 171,241,318 204,089,479
Table: Balance Sheet (VNDmn)
Change, year-to-date -13.5 30.7
Share Price US$ n.a. 1.75 1.49 1.04 1.31
Market Capitalisation US$ n.a. 3,078 2,932 2,042 3,028
Table: Stock Market Indicator
Vietnam Commercial Banking Report Q2 2013
2006 2007 2008 2009 2010 2011
Return on Assets 1.9 1.3 1.2 1.6 1.5 1.2
Loan Deposit Ratio 56.6 68.0 71.8 83.6 86.4 92.2
Equity Asset Ratio 6.7 7.4 6.2 6.5 6.7 7.8
Source: Bank of Foreign Trade of Vietnam (Vietcombank), Bloomberg
© Business Monitor International Page 37
Loan Asset Ratio 40.6 49.1 50.8 55.4 57.5 57.1
Return on Equities 29.4 18.6 17.8 25.7 22.9 17.0
Table: Key Ratios (%)
Vietnam Commercial Banking Report Q2 2013
Strengths Vietnam's largest partly private lender by assets. ■
10% owned by the International Finance Corporation. ■
Strong branch network. ■
Bad debt ration below 1.5% of loans. ■
2011 profit exceeded predictions. ■
Weaknesses Possible exposure to the effects of the bursting of the asset price bubble. ■
Opportunities VietinBank has a 20% market share in Vietnam in terms of total assets is too large to
be ignored.
■
Possible listing in the long term. ■
Targeting lending growth of 20% y-o-y in 2012. ■
25% y-o-y increase in total assets in 2011. ■
Threats Possible exposure to downturn in global trade. ■
Predicted growth limited by state credit limits. ■
Company Overview The Bank for Industry and Trade (VietinBank) was established in 1988 when it was
separated from the State Bank of Vietnam. It became a state-owned corporation in
1993. As one of the four largest state-owned commercial banks in the country,
VietinBank's total assets account for over 20% of the market share of the whole
Vietnamese banking system. VietinBank's capital resources have continued to increase
over the years and have been rising substantially since 1996, with annual average
growth of 20%.
VietinBank has developed a retail and administration network across the country. The
bank's network operates in 56 provinces and cities, with a focus on large cities such as
Hanoi (12 branches; two transaction centres), Ho Chi Minh City (17 branches; one
transaction centre); industrial zones; trading and economic parks; and densely
populated areas. VietinBank is an investor in other institutions such as Saigonbank,
© Business Monitor International Page 38
VietinBank
Vietnam Commercial Banking Report Q2 2013
Indovina Bank, Vietnam International Leasing Company and the VietinBank-Asia
Insurance Company.
VietinBank is 10% owned by the International Finance Corporation, which invested
US$307mn in the lender in 2011. This was the first strategic investment by a foreign
organisation in a Vietnamese state-owned bank. Discussions over selling a 15% stake
to the Canada-based Bank of Nova Scotia are still ongoing as of January 2012,
despite plans to conclude the deal by the end of 2011.
In December 2012, Japanese commercial bank Bank of Tokyo Mitsubishi UFJ
announced that it has acquired a 20% stake in VietinBank. The deal was valued at US
$742mn. The acquisition will enable Bank of Tokyo Mitsubishi UFJ to help Japanese
companies operating in Vietnam, as well as expanding its commercial operations in
South East Asia. Bank of Tokyo Mitsubishi UFJ will also appoint two directors onto the
board of VietinBank.
Corporate
Highlights
The bank's profit in 2011 exceeded forecasts, increasing by 76% y-o-y to VND8.11trn.
Total assets grew 25% y-o-y in 2011 to VND460.4trn, compared with VND367.7trn a
year earlier, making VietinBank the 2nd ranking bank in Vietnam with regard to total
assets. Non-performing loans for 2011 made up 0.74% of VietinBank's overall credit,
and the bank revealed that it is targeting clipping bad debts to below 3% in 2012. The
bank is projecting a 20% y-o-y increase in lending activities in 2013.
Company Address VietinBank - Vietnam Joint Stock Commercial Bank for Industry and Trade
108 Tran Hung Dao
Hanoi
Vietnam
Fax: (84) 439428693
http://www.vietinbank.vn
Website: www.vietinbank.vn Company Data ■
• Status: State-Owned Commercial Bank
© Business Monitor International Page 39
Vietnam Commercial Banking Report Q2 2013
2009
33,196,270
2010
34,896,268
2011
35,806,608
24-Jan-13
54,270,320 Market Capitalisation VND
Share Price VND 17,174 16,110 13,657 20,700
Share Price, % change (eop) -11.1
Shares Outstanding (mn) 1,933 2,166 2,622 n.a.
Source: Vietnam Bank for Industry and Trade (Vietinbank), Bloomberg
2006 2007 2008 2009 2010 2011
Total Assets 135,363,026 166,112,976 193,590,357 243,785,208 367,730,655 460,603,925
Total Deposits 99,683,408 112,692,816 121,634,466 148,530,242 205,918,705 257,273,708
Earnings per share (VND) n.a. n.a. n.a. 659 1,456 2,440
Source: Vietnam Bank for Industry and Trade (Vietinbank), Bloomberg
2006
8,431
2007
10,371
2008
11,073
2009
13,193
2010
18,860
2011
21,899 Total Assets
Total Deposits 6,208 7,036 6,957 8,038 10,561 12,232
Earnings per share (US$) n.a. n.a. n.a. 0.04 0.08 0.12
Source: Vietnam Bank for Industry and Trade (Vietinbank), Bloomberg
© Business Monitor International Page 40
Total Shareholders' Equity 349 665 706 691 944 1,364
Loans & Mortgages 4,988 6,273 6,784 8,746 11,870 13,807
Table: Balance Sheet (US$mn)
Total Shareholders' Equity 5,607,022 10,646,529 12,336,159 12,777,313 18,402,459 28,699,392
Loans & Mortgages 80,091,149 100,482,232 118,601,677 161,619,376 231,434,054 290,397,810
Table: Balance Sheet (VNDmn)
Change, year-to-date 16.5 46.4
Share Price US$ 0.93 0.83 0.65 0.99
Market Capitalisation US$ 1,796 1,790 1,702 2,607
Table: Stock Market Indicators
Vietnam Commercial Banking Report Q2 2013
2006 2007 2008 2009 2010 2011
Return on Assets 0.5 0.8 1.0 0.6 1.1 1.5
Loan Deposit Ratio 80.4 n.a. n.a. 109.9 113.7 114.1
Equity Asset Ratio 4.1 6.4 6.4 5.2 4.9 6.2
Source: Vietnam Bank for Industry and Trade (Vietinbank), Bloomberg
© Business Monitor International Page 41
Loan Asset Ratio 59.2 n.a. n.a. 66.9 63.7 63.7
Return on Equities 11.3 14.1 15.7 10.2 22.3 26.7
Table: Key Ratios (%)
Vietnam Commercial Banking Report Q2 2013
Strengths Established as one of the largest state-owned commercial banks. ■
Massive branch network, especially in rural Vietnam. ■
Bad debt ratio reduced to around 4% in 2012. ■
Weaknesses Possible effects of the bursting of the asset price bubble. ■
Opportunities Attractive partner for any other financial institutions looking to cross-sell products to
the mass market in Vietnam.
■
Expanding footprint into Cambodia. ■
Possible listing in the long term. ■
Undergoing three-year restructuring programme with the Vietnamese government. ■
Threats Perceived exposure to the downturn in global trade. ■
Credit rationing by state will limit growth. ■
Series of embezzlement scandals have damaged the bank's reputation. ■
Company Overview Established in 1988, the Vietnam Bank for Agriculture and Rural Development
(Agribank) is a leading commercial bank and plays a decisive role in capital investment
in developing the agricultural and rural economy, as well as other fields of the
Vietnamese economy. Agribank has over 35,000 staff and about 2,300 branches and
transaction offices nationwide. It is currently the country's largest bank by assets and
extended its reach to Cambodia in 2010 by opening its first overseas branch in the
kingdom.
Agribank has completed a long-term financing agreement with the state oil company
Petrovietnam to provide financing at lower interest rates for the company to develop
Vietnamese oil resources. This could help Agribank establish more long-term
relationships with major businesses.
© Business Monitor International Page 42
Agribank
Vietnam Commercial Banking Report Q2 2013
Corporate
Highlights
Chairman Nguyen Ngoc Bao said in early-February 2012 that the bank had agreed an
extended restructuring plan with the Vietnamese government to be implemented over a
period of three to four years. As part of the revised strategy, Agribank will remain state-
owned but play a more prominent social policy role in support of the country's rural and
agricultural communities. Central bank governor Nguyen Van Binh stipulated that
between 75% and 80% of Agribank's annual lending should go to Vietnamese farmers
in support of the country's key export crops, coffee and rice. Bao also confirmed that
the bank's capital adequacy ratio (CAR) rose from 6.4% in 2010 to 8% in 2011 and
estimated that the Agribank's CAR could reach 9% in 2012 with the aid of a capital
injection from the State Bank of Vietnam to boost its charter capital by VND30trn.
Meanwhile in December 2012, the bank announced that its bad debt ratio had reduced
to around 4% from 6.1% at the beginning of the year. Bao has suggested that this ratio
could drop to as little as 3% between 2015 and 2020, depending on the bank achieving
strong credit growth.
In January 2013, Vietnamese federal police said they had arrested former general
director of the state-owned Agribank, Pham Thanh Tan, for "irresponsibility causing
serious consequences." The news comes on the back of a series discoveries of
massive embezzlements by senior employees, mostly to finance gambling habits. In
November 2012, the Ho Chi Minh City police arrested three senior executives for
stealing US$960,000 from the bank, while city prosecutors charged four others in a US
$5.33mn scam. Another executive was arrested in the city in October for allegedly
stealing US$1mn. In addition, in July 2012 a court in Binh Dinh Province handed a life
sentence to a teller for stealing nearly US$1mn.
Website: www.agribank.com.vn
Status: State-owned commercial bank
Company Data ■
■
2006 2007 2008 2009
Total Assets 238,495,024 321,444,128 400,485,183 480,937,045
Total Deposits 160,396,528 233,638,848 299,954,030 331,893,865
2,565,545 10,627,676 17,798,086 19,860,526 Equity
Source: Vietnam bank for Agriculture and Rural Development (Agribank), Bloomberg
© Business Monitor International Page 43
Total Shareholders'
Loans & Mortgages 181,252,960 246,188,336 288,940,827 361,739,747
Table: Balance Sheet (VNDmn)
Vietnam Commercial Banking Report Q2 2013
2006 2007 2008 2009
Total Assets 14,854 20,069 22,907 26,026
Total Deposits 9,990 14,587 17,157 17,961
160 664 1,018 1,075 Equity
Source: Vietnam bank for Agriculture and Rural Development (Agribank), Bloomberg
2006
0.5
2007
1.6
2008
0.6
2009
0.4 Return on Assets
Equity Asset Ratio 1.1 3.3 4.4 4.0
Source: Vietnam bank for Agriculture and Rural Development (Agribank), Bloomberg
© Business Monitor International Page 44
Return on Equities 66.2 69.4 15.1 9.6
Table: Key Ratios (%)
Total Shareholders'
Loans & Mortgages 11,289 15,370 16,527 19,576
Table: Balance Sheet (US$mn)
Vietnam Commercial Banking Report Q2 2013
Strengths Asset growth. ■
Launched US$2mn IBM datacentre to support expansion in 2011. ■
Pre-tax profits rose during 2011 full-year. ■
Weaknesses Lack of transparency. ■
• Slowing credit growth.
Opportunities Stronger expansion to compete with state lenders. ■
Customer deposits and loans both achieved higher growth rates than industry
average in 2011.
■
Threats Tighter monetary policy to tame economic growth. ■
Scandals involving bbank executives have damaged the bank's reputation. ■
Risk to asset quality on the back of difficult operating environment in 2012. ■
Company Overview Ho Chi Minh City-based Asia Commercial Bank (ABC) was founded in 1993 and
expects its branches to expand three-fold to about 900 by 2015. The bank has
ambitions to enter Vietnam's 'big four' banking circle in the next few years, which would
make it the first non-state lender to do so. The bank said in late 2011 that it aims to rival
the country's dominant state lenders by 2015, with assets jumping three-fold to
VND900trn (US$42.9bn) from VND255trn.
The resignation of a chairman and two executives at ACB in November 2012 fuelled
fears that the beleaguered bank's crisis may indicate wider trouble in the country's
banking system. Chairman Tran Xuan Gia and two deputies resigned on the back of
company deposits being placed with another bank and approved by them. The news
also added to mounting fears over the health of Vietnam's banking industry, first
sparked by the arrest of one of ACB's founders.
Police in Vietnam have confirmed that they are pushing ahead with charges brought
against multimillionaire banking tycoon Nguyen Duc Kien, one of the founders of ACB.
© Business Monitor International Page 45
Asia Commercial Bank
Vietnam Commercial Banking Report Q2 2013
Kien was arrested on August 20 2012, charged with 'illegal business activities' and has
been now accused of 'deliberate wrongdoing causing serious consequences' and fraud.
The bank said in January 2011 that it was to build a new data centre in Ho Chi Minh
City. The centre carried a cost of over US$2mn and is to help the bank better manage
information and customer records. IBM is helping ACB create an IT plan and will play a
role in all facets of the new centre, along with Vietnamese-firm AICT.
Corporate
Highlights
Consolidated profits before tax of ACB reached approximately VND4,203bn in 2011,
higher than the bank's target, and an increase of 34% y-o-y from the pre-tax profit
figure at the end of 2010. The size of the bank increased rapidly and stably in the year
2011. As of December 31 2011, total assets reached VND281,019bn, growing 37% y-o-
y in comparison with 2010.
Of the entire increase in total assets, up to 63% was generated from the stable source
of customer deposits. The amount of customer deposits at ACB reached VND185,637bn
in 2011, up by 35% y-o-y at a time when average growth in the Vietnamese banking
industry was 14.4%. ACB's deposit market share was estimated to be at 6.5%, an
increase of nearly 1% y-o-y. Meanwhile, personal and business loans of the bank grew
18% y-o-y in 2011, roughly 1.5 times the industry average. As of December 31 2011,
outstanding loans reached VND102,809bn, increasing ACB's lending market share by
0.2% to 4%. In short, ACB's customer deposits and loans both achieved higher growth
rates than the industry average.
2006
n.a.
2007
41,493,748
2008
17,637,414
2009
29,067,754
2010
24,473,174
2011
20,348,014
24-Jan-13
15,471,992 Market Capitalisation VND
Share Price VND n.a. 69,072 24,886 33,650 26,100 21,700 16,500
Share Price, % change (eop) -67.0 27.9 -26.5
Shares Outstanding (mn) 336 601 709 864 938 938 n.a.
Source: Asia Commercial Bank (ABC), Bloomberg
© Business Monitor International Page 46
Change, year-to-date -19.9 18.4
Share Price US$ n.a. 4.31 1.42 1.82 1.34 1.03 0.79
Market Capitalisation US$ n.a. 2,591 1,009 1,573 1,255 967 743
Table: Stock Market Indicators
Vietnam Commercial Banking Report Q2 2013
2006 2007 2008 2009 2010 2011
Total Assets 44,645,040 85,391,681 105,306,130 167,881,047 205,102,950 281,019,319
Total Deposits 33,606,012 55,283,104 64,216,949 86,919,196 106,936,611 142,218,091
Earnings per share (VND) 1,467 3,738 3,473 2,653 2,861 3,280
Source: Asia Commercial Bank (ABC), Bloomberg
2006
2,781
2007
5,331
2008
6,023
2009
9,085
2010
10,519
2011
13,361 Total Assets
Total Deposits 2,093 3,452 3,673 4,704 5,484 6,762
Earnings per share (US$) 0.09 0.23 0.21 0.15 0.15 0.16
Source: Asia Commercial Bank (ABC), Bloomberg
2006
1.5
2007
2.7
2008
2.3
2009
1.6
2010
1.3
2011
1.3 Return on Assets
Loan Deposit Ratio 50.6 57.5 54.2 71.7 81.5 72.3
Equity Asset Ratio 3.7 7.3 7.4 6.0 5.5 4.3
Source: Asia Commercial Bank (ABC), Bloomberg
© Business Monitor International Page 47
Loan Asset Ratio 38.1 37.3 33.1 37.1 42.5 36.6
Return on Equities 34.4 44.5 31.5 24.6 21.7 27.5
Table: Key Ratios (%)
Total Shareholders' Equity 106 391 444 547 583 569
Loans & Mortgages 1,056 1,978 1,979 3,347 4,435 4,841
Table: Balance Sheet (US$mn)
Total Shareholders' Equity 1,696,515 6,257,849 7,766,468 10,106,287 11,376,757 11,959,092
Loans & Mortgages 16,954,114 31,676,320 34,604,077 61,855,984 86,478,408 101,822,720
Table: Balance Sheet (VNDmn)
Vietnam Commercial Banking Report Q2 2013
Strengths Valued by the major international banks that deal with it. ■
Emerged from the global financial crisis in a strong position. ■
Has reduced its loan-to-deposit ratio to well below 100% and is less dependent on
borrowing from other financial institutions.
■
Reducing its vulnerability to a lack of liquidity within the banking system. ■
Credit quality of the bank is well controlled. ■
Stable ratings outlook from S&P's. ■
Weaknesses Lack of scale. Eximbank is a fairly large bank in Vietnam but a small institution by
international standards.
■
Potential for problems in the wake of the bursting of the asset price bubble. ■
Opportunities Potential for continuing growth from a low base. ■
Acquisition of minority holding in Sacombank. ■
Strong profits recorded in 2011. ■
Threats Vulnerability to direct or indirect impact from the downturn in global trade. ■
Profit growth is particularly threatened by government loan policy. ■
Company Overview Vietnam Export-Import Bank (Eximbank), established in 1989, is one of country's the
largest commercial joint stock banks in terms of owner's equity. It has a nationwide
network of 183 branches and transaction offices. Its head office is in Ho Chi Minh City.
The bank's total number of employees stood at 5,430 as of the end of 2011, up from
4,472 a year earlier.
The bank's growth is threatened by government concerns over the credit supply. The
government limited credit supply growth to 25% in FY10. This has put the brakes on
bank's growth, which for Eximbank is largely fuelled by an expansion in its loan
portfolio. However, the application of such rules to Eximbank has been less severe
© Business Monitor International Page 48
Eximbank
Vietnam Commercial Banking Report Q2 2013
given its role in the export sector, which the government is keen to promote and protect
as much as possible from restrictive measures aimed at preventing the economy from
overheating.
Corporate
Highlights
As of the end of 2011, Eximbank reported total assets of VND183.6trn, up by 40% y-o-y
from VND131.1trn a year earlier. Within this profit before tax for 2011 reached
VND4,056bn, up by 71% from VND2,378bn in 2010. Similarly net operating profit rose
from VND2,643bn in 2010 to VND4,327bn by the end of 2011. By the end of 2011, the
NPL ratio at Eximbank accounted for 1.61% of the total loan balance, lower than that of
the whole banking industry.
Eximbank has stated that between 2011-2015, it is implementing a five-year
development plan in order to maintain growth while gradually increasing its shareholder
dividends.
In January 2012, Eximbank secured a 9.6% stake in fellow Vietnamese lender
Sacombank for US$77.5mn from Australian group ANZ. It represented the first major
divestment of Vietnamese assets by an overseas bank. The two banks, both based in
Ho Chi Minh City, will seek approval for the plan from shareholders and government
agencies for the deal.
In November 2012, Standard & Poor's has assigned a 'B+' and a 'B' to Eximbank's
long- and short-term issuer credit ratings, according to a press release. The agency
said that its ratings outlook is stable, as the lender demonstrates an adequate business
and risk position. The agency also described the bank's capital as weak, however,
adding that its funding is average.
Website: www.eximbank.com.vn/en
Status: Commercial Joint-Stock Bank
Company Data ■
■
© Business Monitor International Page 49
Vietnam Commercial Banking Report Q2 2013
2009
21,029,446
2010
16,368,107
2011
17,668,052
24-Jan-13
19,397,710 Market Capitalisation VND
Share Price VND 17,094 13,248 14,300 15,700
Share Price, % change (eop) -26.5
Shares Outstanding (mn) 1,236 1,236 1,236 n.a.
Source: Vietnam Export-Import Commercial Joint-Stock Bank (Eximbank), Bloomberg
2006 2007 2008 2009 2010 2011
Total Assets 18,323,772 33,710,424 48,247,821 65,448,356 131,110,882 183,567,032
Total Deposits 13,141,175 22,906,123 30,877,730 38,766,465 70,703,663 53,652,639
Earnings per share (VND) 2,045 1,694 749 917 1,468 2,460
Source: Vietnam Export-Import Commercial Joint-Stock Bank (Eximbank), Bloomberg
2006
1,141
2007
2,105
2008
2,760
2009
3,542
2010
6,724
2011
8,728 Total Assets
Total Deposits 818 1,430 1,766 2,098 3,626 2,551
Earnings per share (US$) 0.13 0.11 0.05 0.05 0.08 0.12
Source: Vietnam Export-Import Commercial Joint-Stock Bank (Eximbank), Bloomberg
© Business Monitor International Page 50
Total Shareholders' Equity 121 393 735 723 693 775
Loans & Mortgages 633 1,147 1,193 2,057 3,165 3,520
Table: Balance Sheet (US$mn)
Total Shareholders' Equity 1,946,667 6,294,943 12,844,077 13,353,319 13,510,740 16,302,520
Loans & Mortgages 10,161,268 18,378,610 20,855,907 38,003,086 61,717,617 74,044,518
Table: Balance Sheet (VNDmn)
Change, year-to-date -5.2 30.1
Share Price US$ 0.93 0.68 0.68 0.75
Market Capitalisation US$ 1,138 839 840 932
Table: Stock Market Indicators
Vietnam Commercial Banking Report Q2 2013
2006 2007 2008 2009 2010 2011
Return on Assets 1.7 1.8 1.7 2.0 1.8 1.9
Loan Deposit Ratio 77.7 80.6 68.8 99.0 88.2 139.2
Equity Asset Ratio 10.6 18.7 26.6 20.4 10.3 8.9
Source: Vietnam Export-Import Commercial Joint-Stock Bank (Eximbank), Bloomberg
© Business Monitor International Page 51
Total Risk Based Capital Ratio n.a. n.a. n.a. n.a. 17.8 n.a.
Loan Asset Ratio 55.7 54.7 44.0 58.6 47.6 40.7
Return on Equities 18.6 11.2 7.4 8.6 13.5 20.4
Table: Key Ratios (%)
Vietnam Commercial Banking Report Q2 2013
Strengths Support from minority stakeholder HSBC. ■
The bank has consistently expanded its branch network since its founding. ■
Strong profitability recorded in 2011. ■
Sound capital adequacy ratio. ■
Weaknesses Tight competition for deposits. ■
The bank has some way to go in modernising processes and systems. ■
Lack of transparency. ■
Opportunities The bank has strong scope for expansion over the long-term. ■
Growth in total assets during 2011. ■
Boost in lending in SME sector. ■
Threats Operating expenses increased 32% y-o-y in 2011. ■
Company Overview Hanoi-based Vietnam Technological and Commercial Joint-stock Bank, or
Techcombank as it is more commonly known, began life in 1993 with its headquarters
then in Ho Chi Minh. Within five years the bank had relocated its headquarters to the
capital and established a handful of branches across Vietnam. London-based HSBC,
which held smaller stakes in the bank in previous years, has held its current 20%
shareholding in the lender since 2008 (where it remained as of early 2012). The bank
has a network of 307 branches and 1,205 ATMs throughout the country, and a
workforce of 8,335.
Corporate
Highlights
As of the end of 2011, the bank's assets totalled VND180,531bn, representing an
increase of 20% y-o-y. As of the same date pre-tax profit came in at a record
VND4,221bn, equivalent to an increase of 54% y-o-y from 2010. Operating income,
meanwhile, increased by VND1,943bn, or 41% y-o-y, to reach VND6,662bn as of
December 31 2011. This success was achieved due to growth in all business activities.
Net Interest income increased continually by 66% y-o-y, reaching VND5,298bn in 2011.
© Business Monitor International Page 52
Vietnam Technological and Commercial Joint-stock Bank
Vietnam Commercial Banking Report Q2 2013
During 2011 operating expenses increased by VND511bn, or 32% y-o-y from 2010.
Lending increased across a number of sectors in 2011, with an increased focus on
exposure to better-rated counter parties and collateralised transactions. Loans to
individual customers grew by VND3,837bn in 2011 to reach VND22,234bn, representing
35% of Techcombank's customer loans.
The bank's capital adequacy ratio of 11.43% was significantly higher than the 9%
minimum required by State Bank of Vietnam.
The bank signed a US$30mn loan agreement with Dutch development bank FMO in
September 2011, in a deal designed to boost lending to both retail and small- and
medium-sized enterprise (SME) customers.
The bank, along with some of its rivals, came under fire by the central bank in late 2010
as it began offering relatively high interest rates on deposits of over 17% in a bid to
grab market share. The State Bank of Vietnam argued that such rates were risky,
potentially destabilising and detrimental to profitability.
2006 2007 2008 2009 2010 2011
Total Assets 17,326,352 39,542,496 59,069,056 92,581,504 150,291,215 180,531,163
Total Deposits 9,566,043 24,476,576 39,617,724 62,347,400 80,550,753 88,647,779
Earnings per share (VND) 1,446 2,452 4,259 3,148 2,990 2,902
Source: Vietnam Technological and Commercial Joint-Stock Bank (Techcombank), Bloomberg
2006 2007 2008 2009 2010 2011
Total Assets 1,079 2,469 3,379 5,010 7,708 8,583
Total Deposits 596 1,528 2,266 3,374 4,131 4,215
Earnings per share (US$) 0.09 0.15 0.26 0.18 0.16 0.14
Source: Vietnam Technological and Commercial Joint-Stock Bank (Techcombank), Bloomberg
© Business Monitor International Page 53
Total Shareholders' Equity 110 223 322 396 482 595
Loans & Mortgages 542 1,279 1,488 2,250 2,683 2,974
Table: Balance Sheet (US$mn)
Total Shareholders' Equity 1,761,687 3,573,416 5,625,408 7,323,826 9,389,161 12,515,802
Loans & Mortgages 8,696,101 20,486,132 26,018,984 41,580,368 52,316,862 62,562,406
Table: Balance Sheet (VNDmn)
Vietnam Commercial Banking Report Q2 2013
2006 2007 2008 2009 2010 2011
Return on Assets 1.8 1.8 2.4 2.2 1.7 1.9
Loan Deposit Ratio n.a. n.a. n.a. n.a. 65.7 71.6
Equity Asset Ratio 10.2 9.0 9.5 7.9 6.2 6.9
Source: Vietnam Technological and Commercial Joint-Stock Bank (Techcombank), Bloomberg
© Business Monitor International Page 54
Loan Asset Ratio n.a. n.a. n.a. n.a. 35.2 35.1
Return on Equities 18.5 19.1 25.7 26.3 24.8 28.8
Table: Key Ratios (%)
Vietnam Commercial Banking Report Q2 2013
Strengths Expected profit increase for 2011. ■
Capital base continues to strengthen. ■
Weaknesses Lack of modernisation. ■
Lack of transparency. ■
Limited presence in Vietnam. ■
Opportunities Further domestic expansion plans. ■
Plans to hike chartered capital to VND5trn. ■
Threats Tighter monetary policy to tame economic growth. ■
Risk to asset quality on the back of difficult operating environment in 2012. ■
Slowing credit growth. ■
Company Overview Ho Chi Minh City-based Viet A Joint Stock Commercial Bank (Vietabank) had 80
branches as of May 2011 and maintains a physical growth target of between 14 and 18
new branches annually.
Corporate
Highlights
In the lastest available data published, Vietabank's pre-tax profit reached VND347bn
(US$16.44mn) in 2010, with return on assets and return on equity standing at 1.33%
and 10.46% respectively. The bank's capital surged by 94% to VND2.94trn (US
$139.29mn) by the end of 2010 on the same point in the previous year. Deposits also
increased by 25% to VND13.47trn (US$638.16mn) by the end of the year, while total
outstanding credit reached VND13.29trn (US$629.63mn) for the year. The majority of
total credit extended during 2010 was made up by short-term loans at 58% of the total,
with long-term loans accounting for the remainder. Meanwhile, the bank's total
investments surged by as much as VND3.45trn (US$163.45mn) to VND3.93trn (US
$186.19mn) in 2010.
The bank said in November 2011 that it sought to generate a pre-tax profit of
VND602bn (US$28.52mn) for 2011, marking a 73.5% jump on the previous year.
© Business Monitor International Page 55
Viet A Joint Stock Commercial Bank (Vietabank)
Vietnam Commercial Banking Report Q2 2013
In April 2012 it was reported that VietABank has purchases 3.52mn shares in southern
bourse-listed Dat Xanh Real Estate Construction and Services Joint Stock Co
(DXG). This was equivalent to a 11% holding in the firm.
At the bank's AGM in May 2013, VietABank announced plans to hike chartered capital
to VND5trn via issuing additional shares valued at VND1.902trn to offer for existing
shareholders and domestic partners. With chartered capital of VND5trn, VietABank
expects to reach total asset value of VND37trn, total outstanding loans of
VND13.315trn, and after tax profit of VND410bn in 2011. The lender's capital adequacy
ratio (CAR) would be higher than 9% and the bad debts ratio is expected at less than
3%.
© Business Monitor International Page 56
Vietnam Commercial Banking Report Q2 2013
Strengths Recently completed its four-year modernisation plan in 2012. ■
Strong rise in pre-tax profits during 2011. ■
NPL ratio lower than industry average. ■
Weaknesses Credit growth capped by central bank. ■
Limited profitability. ■
Lack of transparency. ■
Opportunities Further restructuring and expansion. ■
Increase in total loans and deposits in 2011. ■
Fast-expanding branch network. ■
Threats Tighter monetary policy to tame economic growth. ■
Risk to asset quality on the back of difficult operating environment in 2012. ■
Credit growth capped by central bank. ■
Company Overview Ho Chi Minh City-based Housing Development Commercial Joint Stock Bank
(HDBank) was founded in 1990. One of the country's first commercial banks upon
establishment, the lender had 120 branches and transaction offices across Vietnam as
of the end of 2011, an increase of 25% y-o-y. The bank has more than 2,000
employees.
HDBank has just completed the second phase of its restructuring project (2009 -
2012). This project included enhancing financial capacity, developing modern
technology, building strong and professional human resources, providing a large
spectrum of product packages to satisfy different demands of customers.
© Business Monitor International Page 57
Housing Development Commercial Joint Stock Bank (HDBank)
Vietnam Commercial Banking Report Q2 2013
Corporate
Highlights
As of December 31 2011, HDBank's pre-tax profit reached VND566bn, up by 61% y-o-
y from 2010. The bank's net profit, meanwhile, came in at VND427bn as of the same
date. On a comparable basis of 2011 to 2010 financial performance, the bank's total
assets increased by 31.2% (or VND10,636bn) to VND45,107bn. Meanwhile, total
deposits increased by 30.1% y-o-y in 2011 and total loans increased by 18.1% from
2010.
The bank's bad debt ratio as of December 31 2011 was 1.63%, which was lower than
the industry average.
The State Bank of Vietnam took action against the lender in November 2011, calling on
one of its deputy directors to resign after HDBank broke the central bank's 14% cap on
deposit rates. The central bank also capped HDBank's credit growth at 10% on an
annual basis.
© Business Monitor International Page 58
Vietnam Commercial Banking Report Q2 2013
Strengths Strategic partnerships with Australia and New Zealand Banking Group and the
International Finance Corporation.
■
Emerged from the global financial crisis in a strong position. ■
Reduced its loan-to-deposit ratio to well below 100%. ■
Reducing its vulnerability to a lack of liquidity within the banking system. ■
Weaknesses Lack of scale - Sacombank is a fairly large bank in Vietnam but a small institution by
international standards.
■
Potential direct and indirect problems from the bursting of the asset price bubble. ■
Opportunities Potential for continuing growth from a low base. ■
Strong increase in profits during 2011. ■
Tie-up with Eximbank. ■
Leverage of strong position in the SME lending sector. ■
Expansion into southern China and countries in the Association of Southeast Asian
Nations.
■
Threats Vulnerability to direct or indirect impact from the downturn in global trade. ■
Vulnerable to government credit caps. ■
Total deposits declined during 2011. ■
Company Overview Saigon Thuong Tin CJSB (Sacombank) was incorporated in early 1992. It has been
listed on the Ho Chi Minh City Stock Exchange since July 2006. Its foreign strategic
partners and shareholders include the Australia and New Zealand Banking Group
(10% shareholder), the International Finance Corporation (IFC) (5.25%) and Dragon
Financial Holdings (8.73%). Foreign shareholders collectively own 30% of the bank.
© Business Monitor International Page 59
Sacombank
Vietnam Commercial Banking Report Q2 2013
The bank has 405 transaction points located in 43 of the 63 provinces in Vietna, Laos
and Cambodia.
In 2008, the bank was restructured as a financial holding company. Its subsidiaries
include: Sacombank Asset Management Company; Sacombank Remittance
Express Company; Sacombank Leasing Company; Sacombank Securities
Company; Sacombank Jewelry Company. Associated companies include: Viet Fund
Management JSC; Saigon Thuong Tin Investment JSC; Tan Dinh Import and
Export JSC; Toan Thin Phat Architecture Investment Construction Company; and
Saigon Thuong Tin Real Estate JSC.
More than 50% of Sacombank's loans are to SMEs, which the bank has targeted as its
market. Sacombank intends to help SMEs undertake initial public offerings (IPOs).
These services have been combined with attempts by Sacombank to diversify income
sources away from the credit business. To a certain extent this has been successful,
with funds from these sources accounting for 25.5% of overall income.
Corporate
Highlights
Sacombank generated net interest income of VND5.49trn for 2011, representing an
increase of 71% y-o-y. In total, after-tax profit for 2011 stood at VND2.033trn, which
was a 13% increase y-o-y. By the end of the year, outstanding loans were VND78.49trn,
while credit growth was 1.4%. The bank was also successful in reducing its bad debts,
which fell by 50% in the year. The bank's total outstanding loans by the end of 2011
were VND78.449trn, credit growth was only 1.4%, and the bad debts ratio was 0.56%,
of which, irrecoverable debts were VND158bn - down 50% from the end of 2010.
Total deposits as of the end of 2011 reached VND74.8trn, down by over VND4trn from
2010, of which, it was mainly term savings in gold and foreign currency. Meanwhile, the
bank has partially offloaded its 10% stake in Sacombank Securities Joint Stock Co
(SBS). At the end of 2011 Sacombank has paid up capital of VND15,200bn, of which
chartered capital is VND10,740bn.
Elsewhere, Sacombank and Credit Suisse Singapore have signed a MoU in order to
strengthen their competitiveness in both markets.
In October 2012, Sacombank signed a cooperation agreement with Manulife Vietnam -
one of the leading Life Insurance Company in Vietnam - in order to diversify products
and services, and to improve customer service quality and the competence of both
companies.
In January 2012, fellow Vietnamese lender Eximbank secured a 9.6% stake in
Sacombank for US$77.5mn from Australian group ANZ. It represented the first major
divestment of Vietnamese assets by an overseas bank. The two banks, both based in
Ho Chi Minh City, will seek approval for the plan from shareholders and government
agencies for the deal.
© Business Monitor International Page 60
Vietnam Commercial Banking Report Q2 2013
Website: www.sacombank.com.vn
Status: Commercial Joint Stock Bank
Company Data ■
■
2006
15,043,772
2007
29,139,732
2008
9,413,129
2009
16,147,851
2010
14,870,353
2011
16,216,912
24-Jan-13
19,381,956 Market Capitalisation VND
Share Price VND 19,506 35,999 11,629 19,044 15,486 15,100 19,900
Share Price, % change (eop) 84.9 -70.4 54.9 -22.9
Shares Outstanding (mn) 771 809 781 848 960 978 n.a.
Source: Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Bloomberg
2006 2007 2008 2009 2010 2011
Total Assets 24,776,182 64,572,875 68,438,569 104,019,144 152,386,936 141,468,717
Total Deposits 17,511,580 44,231,944 46,128,820 60,516,273 100,467,290 75,092,252
Earnings per share (VND) 725 1,765 1,181 4,263 2,079 2,241
Source: Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Bloomberg
Total Assets
Loans & Mortgages
1,543
891
4,032
2,198
3,915
1,988
5,629
3,200
7,816
4,188
6,726
3,791
Total Shareholders' Equity 179 459 444 583 754 692
Source: Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Bloomberg
© Business Monitor International Page 61
Earnings per share (US$) 0.05 0.11 0.07 0.24 0.11 0.11
Total Deposits 1,091 2,762 2,638 3,275 5,153 3,570
Table: Balance Sheet (US$mn)
Total Shareholders' Equity 2,870,346 7,349,659 7,758,624 10,776,901 14,694,975 14,546,883
Loans & Mortgages 14,312,894 35,200,574 34,757,119 59,141,487 81,664,200 79,726,547
Table: Balance Sheet (VNDmn)
Change, year-to-date -19.8 47.0
Share Price US$ 1.21 2.25 0.67 1.03 0.79 0.72 0.96
Market Capitalisation US$ 937 1,819 538 874 763 771 931
Table: Stock Market Indicators
Vietnam Commercial Banking Report Q2 2013
Return on Assets
Return on Equities
2.4
19.8
3.1
27.4
1.4
12.6
1.9
18.3
1.5
15.2
1.4
14.5
Loan Asset Ratio 58.1 54.8 51.2 57.4 54.1 56.9
Total Risk Based Capital Ratio n.a. n.a. n.a. n.a. 10.0 n.a.
Source: Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Bloomberg
© Business Monitor International Page 62
Equity Asset Ratio 11.6 11.4 11.3 10.1 9.2 10.3
Loan Deposit Ratio 82.2 80.0 75.9 98.6 82.1 107.3
Table: Key Ratios (%)
Vietnam Commercial Banking Report Q2 2013
Regional Overview
Asia Overview
Assessing The Banking Boom In South East Asia
BMI View: We expect South East Asian banks to continue expanding aggressively into the region, on the
back of a surge in mergers and acquisitions (M&A) activity in 2013. Malaysian banks have taken the lead
in terms of leveraging on the investment banking boom, partly driven by the country's status as the largest
issuer of Islamic banking assets in the region. Meanwhile, we expect Thai commercial banks to ramp up
efforts to expand into countries such as Cambodia and Myanmar, driven by government efforts to promote
cross-border investment and trade between Thailand and these countries.
In recent years, South East Asian banks have become increasingly aggressive in expanding their operations
in the region, and we expect this phenomenon to continue in 2013. Member countries of the Association of
Southeast Asian Nations (ASEAN) have pledged to gradually open up their banking sectors to allow for
increased foreign competition, as part of a broader agreement towards establishing the ASEAN Economic
Community (AEC) in 2015. Proponents of the AEC claim that by deepening economic links through
financial integration, cross-border investments, and promoting free trade in the region, member countries
will gain access to a wider market for their exports. Crucially, we expect increased economic integration to
also boost demand for more sophisticated and innovative financial products and services going forward.
© Business Monitor International Page 63
Vietnam Commercial Banking Report Q2 2013
Investment Banks See Boom In Underwriting Business
Malaysia - Composition Of Loan Portfolio By Purpose Of Loans, %
Source: BMI, Bank Negara Malaysia
Investment Banking Revenues Surge
We have already witnessed a significant increase in cross-border investment and intraregional mergers and
acquisitions (M&A) in 2012. According to figures published by data provider Dealogic, investment banking
fees in Southeast Asia have soared to the highest level on record for the first nine months of 2012. Looking
ahead, we expect plans to further promote financial integration to open up more opportunities for the
banking industry. For example, ASEAN countries have agreed to further integrate their capital markets by
linking their stock exchanges to establish a common trading network for investors. The move is widely
expected to boost liquidity and attract more foreign capital inflows into the region, rivalling fast-growing
capital markets such as Hong Kong and China. We expect banks that have already established a strong
investment banking presence in the region to benefit from the expected increase in M&A activity over the
coming years.
© Business Monitor International Page 64
Vietnam Commercial Banking Report Q2 2013
Malaysia Takes The Lead
Malaysian banks have taken the lead in terms of leveraging on the investment banking boom, partly driven
by the country's status as the largest issuer of Islamic banking assets in the region. Malaysia is reportedly
one of the key drivers responsible for the recent increase in investment banking fees, according to a report
published by Dealogic. Investment banking revenue in the country reached US$416mn between January
and October in 2012, a year-to-date record and a 46% increase y-o-y. Malaysia also commands a strong
36.7% share of total investment banking fees generated in South East Asia.
We expect Malaysian banks including Maybank Group and CIMB Group to continue to leverage on their
strengths as the region's leading issuers of Islamic banking products and solutions. Maybank Islamic, the
Islamic banking arm of Maybank Group, is the largest Islamic bank in Asia having already established a
strong presence in Singapore, Indonesia, Hong Kong and the Philippines. Meanwhile, CIMB has been
playing catch-up aggressively and is currently deriving around 10% of its earnings from its Islamic banking
operations in Indonesia, Singapore and Brunei. Given the competitive advantages that Malaysian banks hold
in terms of technological capabilities, financial strength, risk management, and the country's deep economic
links relative to the region, we expect Malaysian banks to maintain their lead over their regional
counterparts at least over the medium term.
© Business Monitor International Page 65
Vietnam Commercial Banking Report Q2 2013
Foreign Loans Set To Pick Up In 2013
Thailand - Loans To Foreign Entities, % chg y-o-y
Source: BMI, Bank of Thailand
Thai Commercial Banks Targeting High-Growth Economies
Banks in Thailand are adopting a slightly different strategy by expanding their networks in lower-income,
high growth, and largely untapped countries in the region (such as Cambodia and Myanmar). Krungthai
Bank and Siam Commercial Bank recently opened their first representative offices in Myanmar in 2012
and Kasikornbank has announced plans to open its first branch by February 2013. As the accompanying
chart shows, loans issued by Thai commercial banks to foreign entities have enjoyed a spectacular boom in
recent years, averaging expansion of 75.0% and 128.3% in 2011 and 2012, respectively.
Although we caution that aggressive expansion into countries such as Cambodia and Myanmar reflects a
high-risk strategy for local banks, we believe that the potential for growth is much greater. Furthermore,
given that the Thai government has been actively promoting cross-border investment and trade between
Thailand and these countries, we believe that demand for trade financing and investment banking services
will pick up significantly over the coming years. On the whole, we expect Thai banks to further accelerate
efforts to expand their operations into the region, and this should contribute significantly to banking sector
revenues in 2013.
© Business Monitor International Page 66
Vietnam Commercial Banking Report Q2 2013
Global Industry Overview
Global Commercial Banking Overview
Implications Of Reforms To Basel III Liquidity Requirements
BMI View: Global central bank heads agreed on January 6 2013 to loosen the Basel III liquidity
requirements for major financial institutions. This decision is positive for industry profitability, and
modestly improves the near-term outlook for loan and asset growth.
The Governors and Heads of Supervision of the Basel III accords emerged from their meeting with changes
to the existing liquidity arrangements that will significantly ease the burden on major banks worldwide. To
recap, Basel III is an improvement on the previous two iterations, as it lays out stricter definitions of high
quality capital, and specifically, higher capital requirements and liquidity ratios. This is in response to the
2008 financial crisis, which laid bare the potential for liquidity risk, as opposed to just the solvency risk that
was focused upon in Basel I and II. The so-called 'Liquidity Coverage Ratio' (LCR) is designed to allow
banks to survive a 30-day funding crisis by relying on internal liquid assets, hence avoiding a Lehman-style
meltdown. The numerator of the ratio is 'high quality liquid assets', while the denominator is the 'net
liquidity outflows' that banks would face when put under a stress situation over a 30-day period during a
severe system-wide shock. By the time this aspect of Basel III is fully implemented, the ratio must exceed
100%.
© Business Monitor International Page 67
Vietnam Commercial Banking Report Q2 2013
Bank Share Prices Responding Well To Basel III Amendments
MSCI World Bank Equity Index
Source: Bloomberg, BMI
The changes agreed in January 2013 include a major redefinition of high quality liquid assets that would
count towards banks' LCR. For example, in the set of rules agreed in 2010, corporate debt needed to be rated
AA- or higher to be considered high quality; now, securities can be rated as low as BBB-, the lowest
investment grade rating. Furthermore, banks can now use residential mortgage-backed securities and even
some equities to meet the requirements (albeit they will count far less toward the liquidity requirements than
government bonds, with 25-50% haircuts applied). Additionally, the timetable for the full introduction of
the new liquidity requirements has been pushed back dramatically from the originally scheduled deadline of
2015. Banks will only have to hold 60% of the total buffer by 2015, rising by 10% per year to 2019.
Meanwhile, the 'outflows' in the denominator of the LCR have been clarified, and many will be subject to
less stringent conditions. For example, the assumed outflow rate under a stress scenario for maturing
secured funding transactions with central banks will be reduced to 0% from 25%. The table below shows
the main changes to the Basel III framework as agreed on January 6.
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Vietnam Commercial Banking Report Q2 2013
Before
Corporate debt rated AA- or higher (as Level 2 asset)
Now
Corporate debt rated A+ to BBB- (with 50% haircut applied)
Definition of 'High Quality Assets'
Residential MBS rated AA or higher (with 25% haircut applied) No Residential MBS included
Timetable For Introduction of LCR
100% of buffer to be in place by 1 January 2015
60% by 1 January 2015; 10% added annually to 100% by 1 January 2019
Non-financial, non-operational corporate deposits outflow rate: 75% Inflows and Outflows Now 40%
New guidance that low outflow rate (0-5%) expected to apply on trade finance Trade finance - no outflow rate guidance
Source: Bank for International Settlements, BMI
We interpret this agreement as having been taken for three pragmatic considerations. First, the 2010
regulations were agreed upon before the European banking crisis, which helps explain why some of the
asset requirements needed to be amended. Banks in Europe, for example, would have been forced to
purchase even greater quantities of their home governments' debt - only further extricating the banking
sector into the sovereign crisis. Second, the quantity and availability of 'risk-free' liquid assets may not have
been sufficient to meet all of the requirements, so some expansion of the eligible assets is both desirable
and, perhaps, necessary from a pragmatic standpoint. Third, several of the world's major central bankers
were faced with the dilemma of having reached the limit of conventional monetary easing, and are now
resorting to easing regulations in an effort to open up lending channels. The degree to which this will work
in the short run is probably limited, given that the existing expansion of the monetary base in many
countries and low central bank funding costs have not translated into lending. However, it will remove some
of the concern that the reluctance to lend has been a result of regulatory factors. Indeed, the revised
timetable for the new regulations will relieve the urgency to quickly build up liquid assets, particularly for
European banks which have been under stress and unwilling and unable to lend. Bank of England Governor
Mervyn King, who announced the new measures on behalf of the committee, made this aspect of the revised
© Business Monitor International Page 69
Maturing secured funding transactions with central banks outflow rate: 25% Now 0%
Liquidity facilities to non-financial corporates outflow rate: 100% Now 30%
No equity included Some equity (with 50% haircut applied)
Table: Selected Highlights Of Changes To The Formulation of the Basel III Liquid Coverage Ratio
Vietnam Commercial Banking Report Q2 2013
legislation clear, arguing that the revisions 'will ensure that the new liquidity standard will in no way hinder
the ability of the global banking system to finance a recovery'.
We have a few additional thoughts:
Easing the capital requirements will make banks more profitable because it will allow them to count
higher-yielding assets toward the liquidity requirements. This helps explain why bank share prices soared
in the days immediately following the Basel announcement.
■
By the end of 2011, 208 banks were short by EUR1.8trn (US$2.4trn) in LCR funding, according to the
Basel committee. By contrast, Bank of England Governor King said that the 'vast majority' of the world's
biggest 200 banks that abide by the Basel regulations already comply with the new relaxed standards.
Many of those that do not are presumably European banks that are still rebuilding their balance sheets.
■
Some of the clarifications are sensible by almost any standard. One is that 'countries with distressed
banking systems will have complete flexibility in their application of the LCR until the distress has
passed'. To put this another way, having saved for a rainy day, banks will be allowed to use their savings
to cope with a crisis without worrying about meeting capital ratios in the short run.
■
Emerging market banking sectors stand to be a major beneficiary of the new requirements. Regulators in
major EM countries had complained that the supply of high quality assets, as defined in the 2010
agreement, was too limited, and that major EM banks would struggle in many cases to meet the
requirements.
■
While it is understandable that the Basel committee believe it wise to expand the definition of high
quality liquid instruments, particularly given the European crisis, we have some concerns about the
degree to which the rules have been watered down. It is a bit of a stretch, for example, to believe that in a
2008-style crisis that even with a 25% haircut that MBS could provide ready liquidity for a bank that is in
trouble. This is especially the case since many banks in a single banking system could plausibly seek to
use the same type of asset as collateral should it prove the most profitable (e.g. using significant amounts
of MBS to meet the liquidity requirements), and that asset could prove to be very difficult to unload in a
time of crisis. That said, we do not expect this to be a major problem given that the new, lower-rated
securities can only count toward a maximum of 15% of the total of high-quality liquid assets.
■
The new rules will ease the flow of trade finance, by including a low outflow rate (0-5%) in the
denominator of the LCR. In other words, banks that engage heavily in trade finance will be able to hold a
smaller liquidity buffer than they would have previously. This will be positive for several EM
commercial banking markets that have high components of trade finance in their operations.
■
The next item on the agenda for the Basel committee will be the Net Stable Funding Ratio, which aims to
address another salient aspect of the 2008 financial crisis - banks' funding mismatch between short-term
borrowing and long-term lending. The idea is to require banks to hold a better match between long-term
financing and long-term asset accumulation in order to avoid the type of rollover risk seen in the financial
crisis. Like the LCR, the NSFR regulations will be enforced as of 2019, however, the Basel committee will
only produce the framework of rules at some point in the next two years.
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Vietnam Commercial Banking Report Q2 2013
Demographic Forecast
Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only is
the total population of a country a key variable in consumer demand, but an understanding of the
demographic profile is key to understanding issues ranging from future population trends to productivity
growth and government spending requirements.
The accompanying charts detail Vietnam's population pyramid for 2011, the change in the structure of the
population between 2011 and 2050 and the total population between 1990 and 2050, as well as life
expectancy. The tables show key datapoints from all of these charts, in addition to important metrics
including the dependency ratio and the urban/rural split.
Source: World Bank, UN, BMI
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Vietnam Commercial Banking Report Q2 2013
1990 1995 2000 2005 2010 2012f 2015f 2020f
Total 67,102 74,008 78,758 83,161 87,848 89,730 92,443 96,355
5-9 years 8,685 9,193 9,124 6,921 6,703 6,885 7,143 6,982
15-19 years 7,127 7,408 8,535 9,064 8,963 8,161 6,806 6,628
25-29 years 5,893 6,361 6,879 7,167 8,284 8,602 8,862 8,803
35-39 years 3,965 4,794 5,688 6,163 6,677 6,770 6,991 8,131
45-49 years 2,039 2,358 3,802 4,653 5,548 5,761 6,012 6,536
55-59 years 1,946 1,843 1,887 2,201 3,617 4,001 4,446 5,305
65-69 years 1,283 1,391 1,659 1,582 1,621 1,649 1,927 3,233
75+ years 1,127 1,305 1,559 1,852 2,264 2,388 2,516 2,743
f = BMI forecast. Source: World Bank, UN, BMI
© Business Monitor International Page 72
70-74 years 919 1,084 1,194 1,439 1,389 1,384 1,438 1,729
60-64 years 1,544 1,822 1,737 1,767 2,076 2,573 3,455 4,268
50-54 years 1,933 1,968 2,287 3,739 4,580 4,936 5,449 5,914
40-44 years 2,420 3,884 4,710 5,614 6,086 6,304 6,609 6,925
30-34 years 4,884 5,779 6,250 6,765 7,058 7,475 8,202 8,779
20-24 years 6,492 7,003 7,305 8,420 8,954 9,115 8,892 6,745
10-14 years 7,504 8,604 9,142 9,038 6,844 6,539 6,668 7,104
0-4 years 9,340 9,212 7,002 6,776 7,186 7,186 7,026 6,529
Table: Vietnam's Population By Age Group, 1990-2020 ('000)
Vietnam Commercial Banking Report Q2 2013
1990 1995 2000 2005 2010 2012 2015f 2020f
0-4 years 13.92 12.45 8.89 8.15 8.18 8.01 7.60 6.78
10-14 years 11.18 11.63 11.61 10.87 7.79 7.29 7.21 7.37
20-24 years 9.68 9.46 9.27 10.13 10.19 10.16 9.62 7.00
30-34 years 7.28 7.81 7.94 8.14 8.03 8.33 8.87 9.11
40-44 years 3.61 5.25 5.98 6.75 6.93 7.03 7.15 7.19
50-54 years 2.88 2.66 2.90 4.50 5.21 5.50 5.89 6.14
60-64 years 2.30 2.46 2.21 2.12 2.36 2.87 3.74 4.43
70-74 years 1.37 1.46 1.52 1.73 1.58 1.54 1.56 1.79
f = BMI forecast. Source: World Bank, UN, BMI
© Business Monitor International Page 73
75+ years 1.68 1.76 1.98 2.23 2.58 2.66 2.72 2.85
65-69 years 1.91 1.88 2.11 1.90 1.85 1.84 2.08 3.36
55-59 years 2.90 2.49 2.40 2.65 4.12 4.46 4.81 5.51
45-49 years 3.04 3.19 4.83 5.59 6.32 6.42 6.50 6.78
35-39 years 5.91 6.48 7.22 7.41 7.60 7.55 7.56 8.44
25-29 years 8.78 8.60 8.73 8.62 9.43 9.59 9.59 9.14
15-19 years 10.62 10.01 10.84 10.90 10.20 9.10 7.36 6.88
5-9 years 12.94 12.42 11.58 8.32 7.63 7.67 7.73 7.25
Table: Vietnam's Population By Age Group, 1990-2020 (% of total)
Vietnam Commercial Banking Report Q2 2013
1990 1995 2000 2005 2010 2012 2015f 2020f
Dependent ratio, % of total working age 1 75.5 71.2 60.5 49.7 42.1 40.9 40.6 41.6
Active population, % of total 3 57.0 58.4 62.3 66.8 70.4 71.0 71.1 70.6
Youth population, % of total working age 5 66.8 62.5 51.5 40.9 33.5 32.4 31.7 30.3
Pensionable population, % of total working age 7 8.7 8.7 9.0 8.8 8.5 8.5 8.9 11.3
f = BMI forecast; 1 0>15 plus 65+, as % of total working age population; 2 0>15 plus 65+; 3 15-64, as % of total population; 4 15-64; 5 0>15, % of total working age population; 6 0>15; 7 65+, % of total working age population; 8 65+. Source: World Bank, UN, BMI
1990 1995 2000 2005 2010 2012 2015f 2020f
Urban population, % of total 20.3 22.2 24.3 26.4 28.7 29.7 31.2 33.9
Urban population, '000 13,438.6 16,201.6 18,865.4 21,940.1 25,212.5 26,649.9 28,842.1 32,664.4
f = BMI forecast. Source: World Bank, UN, BMI
© Business Monitor International Page 74
Rural population, '000 52,761.4 56,778.4 58,770.0 61,166.2 62,635.9 63,080.4 63,600.5 63,690.7
Rural population, % of total 79.7 77.8 75.7 73.6 71.3 70.3 68.8 66.1
Table: Vietnam's Rural And Urban Population, 1990-2020
Pensionable population, '000 8 3,330 3,780 4,411 4,874 5,274 5,421 5,881 7,706
Youth population, total, '000 6 25,529 27,009 25,268 22,735 20,732 20,610 20,837 20,615
Active population, total, '000 4 38,243 43,218 49,079 55,552 61,842 63,699 65,725 68,034
Dependent population, total, '000 2 28,859 30,790 29,679 27,609 26,006 26,031 26,717 28,321
Table: Vietnam's Key Population Ratios, 1990-2020
Vietnam Commercial Banking Report Q2 2013
Methodology
BMI's Commercial Banking Forecast Report series is closely integrated with our analysis of country risk,
macroeconomic trends and financial markets. As such, the reports draw heavily on our extensive economic
data set, which includes up to 550 indicators per country, as well as our in depth view of each local market.
We collate our commercial banking databank from official sources (including central banks and regulators)
wherever possible, and only fall back on secondary sources where all attempts to secure primary data have
failed. Company data is sourced, in the first instance, from company reports, with central bank, regulator or
trade association data only used as a backup. All of the risk ratings and forecasts within this report are a
result of BMI's own proprietary research and do not in any circumstances include consensus or third party
numbers.
How Our Data Set Is Structured The reports focus on total assets, client loans and client deposits.
Total assets are analogous to the combined balance sheet assets of all commercial banks in a particular
country. They do not incorporate the balance sheet of the central bank of the country in question.
Client loans are loans to non-bank clients. They include loans to public sector and state-owned enterprises.
However, they generally do not include loans to governments, government (or non-government) bonds held
or loans to central banks. Client deposits are deposits from the non-bank public. They generally include
deposits from public sector and state-owned enterprises. However, they only include government deposits if
these are significant.
We take into account capital items and bond portfolios. The former include shareholders funds, and
subordinated debt that may be counted as capital. The latter includes government and non-government
bonds.
In quantifying the collective balance sheets of a particular country, we assume that three equations hold
true:
Total assets = total liabilities and capital. ■
Total assets = client loans + bond portfolio + other assets. ■
Total liabilities and capital = capital items + client deposits + other liabilities. ■
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Vietnam Commercial Banking Report Q2 2013
In terms of the equations, other assets and other liabilities are balancing items that ensure equations two and
three can be reconciled with equation one. In practice, other assets and other liabilities are analogous to
inter-bank transactions. In some cases, such transactions are generally with foreign banks.
In most countries for which we have compiled figures, building societies/thrifts are an insignificant part of
the banking landscape, and we do not include them in our figures. The US is the main exception to this.
In some cases, total assets and client loans include significant amounts that are owned or that have been lent
to customers in another country. In some cases, client deposits include significant amounts that have been
deposited by residents of another country. Such cross-border business is particularly important in major
financial centres such as Singapore and Hong Kong, the richer OECD countries and certain countries in
Central and Eastern Europe.
Commercial Bank Business Environment Rating
In producing our Commercial Banking Business Environment Rating, our approach has been threefold.
First, we have explicitly aimed to assess the market attractiveness and risks to the predictable realisation of
profits in each state, thereby capturing the operational dangers facing companies operating in this industry
globally. Second, we have, where possible, identified objective indicators that serve as proxies for issues/
trends within the industry to ensure consistent evaluate across states. Finally, we have used BMI's
proprietary Country Risk Ratings in a nuanced manner to ensure that the ratings accurately capture broader
issues that are relevant to the industry and which may either limit market attractiveness or imperil future
returns. Overall, the ratings system, which integrates with all the other industry Business Environment
Ratings covered by BMI, offers an industry-leading insight into the prospects/risks for companies across the
globe.
Conceptually, the ratings system divides into two distinct areas:
Limits of Potential Returns: Evaluation of industry's size and growth potential in each state, and also
broader industry/state characteristics that may inhibit its development.
■
Risks to Realisation of Returns: Evaluation of industry-specific dangers and those emanating from the
state's political/economic profile that call into question the likelihood of anticipated returns being realised
over the assessed time period.
■
In constructing these ratings, the following indicators have been used. Almost all indicators are objectively
based.
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Vietnam Commercial Banking Report Q2 2013
Limits of Potential Returns Rationale
Banking market structure
Indication of growth potential. The greater the likely absolute growth in total assets, the higher the score Estimated growth in total assets, 2012-2016
Country structure
Those aged 16-64 in each state, as a % of total population. A high proportion suggests that the market is comparatively
more attractive Active population
Standard deviation of growth over seven-year economic cycle. A proxy for economic stability GDP volatility
Banking market risks
Subjective evaluation of the impact of the regulatory environment on the competitive landscape Regulatory framework and competitive environment
Short-term financial risk Rating from CRR, evaluating currency volatility
Rating from CRR, to denote strength of legal institutions in each state. Security of investment can be a key risk in some
emerging markets Legal framework
Source: BMI
© Business Monitor International Page 77
Rating from CRR to denote ease of conducting business in the Bureaucracy state
Rating from CRR, evaluating the risk of a sharp change in the Policy continuity broad direction of government policy
BMI's Country Risk Ratings (CRR)
Subjective evaluation of de facto/de jure regulations on overall Regulatory framework and industry development development of the banking sector
Risks to Realisation of Returns
Corporate tax A measure of the general fiscal drag on profits
A proxy for wealth. High-income states receive better scores GDP per capita than low-income states
Indication of the scope for expansion in profits through Estimated growth in client loans, 2012-2016 intermediation
Indication of overall sector attractiveness. Large markets are Estimated total assets, 2012 considered more attractive than small ones
Table: Commercial Banking Business Environment Indicators And Rationale
Vietnam Commercial Banking Report Q2 2013
Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal
weight. Consequently, the following weights have been adopted.
Component
Limits of Potential Returns, of which:
Weighting, %
70, of which
- Country Structure 40
- Banking market risks 40
Source: BMI
© Business Monitor International Page 78
- Country Risk 60
Risks to Realisation of Returns, of which: 30, of which
- Banking market structure 60
Table: Weighting Of Indicators