Foreign banks compete on service quality
Foreign banks, foreign bank branches and joint venture banks, hereafter referred to as foreign banks, had more effective operation than domestic banks in 2011.
According to the HCM City Branch of the State Bank, the business result of the bank group increased by four folds in comparison with late 2010. The banks had the mobilized capital up by 19 percent, the outstanding loans up by 7 percent, while the non-performing loans were very low at 1.17 percent.
Figures show that foreign banks have made a big leap on the Vietnamese market. The outstanding loans of the whole banking system by December 31, 2011, had increased by 6.3 percent over 2010, of which joint venture banks’ outstanding loans had increased by 3.75 percent and foreign banks 9.04 percent. The outstanding loans growth rate of foreign banks was higher than that of joint stock banks (6.32 percent) and state owned banks (5.11 percent).
Joint venture banks and foreign bank branches now reportedly hold 11.5 percent of the market share. However, if compared with the end of 2010, the volume of capital mobilized by the banks from the public had increased by 20.6 percent, while state owned banks saw the decrease of 0.67 percent, and joint stock banks saw the increase of 14.3 percent.
Also according to the State Bank, the ROA of foreign banks was 0.16 percent by October 2011, and ROE 6.9 percent.
ANZ Vietnam’s General Director Tareq Muh said 2011 was a successful year for ANZ, with the number of clients increasing significantly. A lot of businesses have shifted their main transaction accounts to ANZ for both the payment and cash flow management purposes. Many individual have also become the clients of ANZ.
General Director of Standard Chartered Vietnam Louis Taylor also said that his bank had a prosperous year in 2011 despite the difficult economic conditions.
Foreign banks now target Vietnamese businesses
Analysts have predicted that foreign banks would make a breakthrough in 2012, which would have big impacts on the Vietnamese market.
“While very few Vietnamese banks accept losses to make long term investment, foreign banks accept lower profits to make heavy investment to conquer the market which Vietnamese banks still think they are dominating,” director of a joint stock bank noted.
“Foreign banks will not only compete in interest rates, but also in brands, service quality and creative products,” he said. “Mobilizing capital will not be the field that Vietnamese banks once held absolute advantages anymore.”
Tareq Muhmood said that ANZ is now operating like a domestic bank, which can provide all banking services. “We have figured out a business strategy for the next three years, and detailed plans and measures to implement the strategy. We are step by step implementing the strategy,” he said.
He went on to say that the bank would continue expanding the commercial banking, targeting small and medium enterprises, especially export companies. Besides, the bank would also develop and upgrade the services reserved for high grade clients.
As for Standard Chartered, Louis Taylor said in 2012, the bank would continue developing diversified business modes and consumer finance solutions for domestic and foreign clients in Vietnam. The bank would continue focusing on small and medium enterprises.
Foreign banks want more “room” for them on the Vietnamese market. At the Vietnam Business Forum in December 2011, the banking working group proposed the government to extend the limitation on the lending to one client. The loans guaranteed by the government or from the export credit support agencies should not be counted on the credit limits.
Foreign banks have also proposed the government to increase the maximum foreign ownership ratio in domestic banks from the current level of 30 percent, especially when the central bank expects the merger and purchases of banks.
Source: TBKTSG
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