HANOI -
Foreign-invested banks operating in Vietnam had a
successful year in 2005, garnering huge profit
margins while significantly increasing their
market shares over 2004, according to the State
Bank of Vietnam (SBV).
The total assets of
foreign invested credit institutions have reached
nearly VND100 trillion (US$6.3 billion), a
year-on-year increase of 25%. The SBV also
reported that the total pre-tax turnover of
foreign invested and joint-venture bank branches
increased by an average of 45%.
As for
foreign bank branches, their total outstanding
loans increased 30% by the end of 2005, twice as
much as the total
increase of the banking
system, with total lending loans accounting for
$3.1 billion, or 9% of the market share. These
banks' overdue debts accounted for only 0.06% of
the market share.
Meanwhile, joint-venture
banks' outstanding loans sat at VND6 trillion by
the end of last year, accounting for 2% of the
market share. These banks' profit margins climbed
to VND200 billion, a 15% increase over the same
period of 2004.
Last year, a number of
foreign banks purchased shares in joint stock
commercial banks, according to Kieu Huu Dung,
director of the Bank and non-Bank Department under
the SBV.
"Three foreign banks acquired
stakes from three domestic joint stock commercial
banks last year. Of this, the Australia and New
Zealand Bank (ANZ) bought 10% of Sacombank's
stakes, the Standard Chartered acquired 10% of the
Asian Commercial Bank's stakes and the Hong Kong
and Shanghai Banking Corporation purchased 10% of
Techcombank's stocks," Dung said.
Banking
experts forecast that this year, foreign banks and
international finance organizations would continue
to invest in numerous fields of the Vietnamese
economy, primarily by acquiring commercial joint
stock banks, opening branches or representative
offices, setting up finance companies and
diversifying modern banking services.
"The
banking environment in the country will be more
effervescent but challenging, as domestic banks
will face difficulties and competition," one
industry expert said.
However, overseas
banks have asked the SBV to loosen restrictions on
opening new branches and the proportion of
deposits mobilised on Vietnamese dong.
The
SBV's deputy governor Phung Khac Ke said the
central bank was now debating whether to revise a
decree orienting non-discrimination, thus fully
implementing most-favored nation treatment
principles, to satisfy the World Trade
Organization's regulations.
"The decree
will create more favorable conditions to help
foreign banks operate more effectively," Ke said.
Until now, about 28 foreign banks' branches, four
joint-venture banks and three foreign invested
leasing companies have been established in
Vietnam.
