Market Report, "Vietnam Commercial Banking Report Q4 2010", published

Fast Market Research recommends "Vietnam Commercial Banking Report Q4 2010" from Business Monitor International, now available
 
Oct. 10, 2010 - PRLog -- We expect the Vietnamese banking sector to continue to expand in 2010 and 2011 despite domestic and global headwinds. While far-reaching government intervention continues to hamper development, we expect private sector and foreign-owned banks to increasingly dominate the industry, with smaller players finding it increasingly difficult to compete. The first quarter of 2010 was turbulent for the Vietnamese banking sector, with the removal of the cap of lending rates in March allowing joint-stock commercial banks (JSCBs) to raise rates in order to re- establish their profit margins. Faced with a banking sector refusing to lend at the maximum interest rate of 12%, the State Bank of Vietnam (SBV) removed the interest rate cap on medium and long-term loans in March. It went on to also removed the interest rate cap on short-term loans. Interest rates shot up to 15- 20% in a matter of days as cash-hungry corporate clients rushed to refinance.     However, with the government fearing that many comp anies would be cut off from affordable financing, with potentially severe consequences for economic growth, the SBV demanded in early April that commercial banks cut their lending rates to 14-15%. State-owned banks such as the Bank for Investment and Development of Vietnam (BIDV) led the way by cutting rates to 12-13% for select borrowers. However, faced with decreasing loan demand due to the higher rates, after the initial surge, many banks increased their purchases of government bonds, which were still trading at double-digit yields in Q210. While the downward pressure on lending rates will affect banks' net interest margins, we expect banking sector profits to increase in 2010. Bank profits were healthy in Q110 after a fairly dismal 2009. Most JSCBs are targeting profit growth of 25-55% in 2010 and falling net interest margins will again put pressure on banks to expand lending to increase profit s. We have therefore raised our forecast for loan growth in 2010 from 22% to 27%. Outstanding loans increased by 5.58% between January and April, in line with the government's overall credit growth target of 25%. However, with banks increasingly hungry to lend and the government appearing less concerned about price growth after the first drop in consumer price inflation in eight months in April 2010, to 9.2% year-on-year, we now expect the official loan growth target to be overshot again.A higher pace of loan growth should underpin banking sector profits, albeit at the risk of higher loan loss provisions down the road. As per usual, we expect the larger JSCBs to lead the way.     If the current level profit growth is maintained, the larger JSCBs such as Asia Commercial Bank and Techcombank will be more profitable than the larger state- owned commercial banks (SOCBs) within a few years. This is in line with our expectation that SOCBs will become increasingly marginalised in the coming years and will primarily focus on helping the government accomplish policy goals. We expect the mainstream retail and corporate banking market to be dominated in a few years time by the larger JSCBs and the growing number of foreign players active in the Vietnamese market. While further efficiency gains are expected at Vietcombank and VietinBank , which have been partly privatised, we expect SOCBs to continue to lag the JSCBs in terms of asset growth.     However, the prospects for JSCBs are not entirely brig ht as they face increasing competition from foreign banks with superior technology and experience in developing attractive financial services solutions for consumer markets.     The regulatory protection from competition from foreign banks is being phased out as outlined when Vietnam joined the WTO in 2007. As a result, foreign banks are less dependent on domestic partners to enter the market and some institutions, such as Australia & New Zealand Banking Group , are divesting their stakes in local banks in order to focus on their 100% owned local subsidiaries. We continue to believe that the Vietnamese banking s ector will be dominated by foreign players in about 10 years time, with only the largest and most efficient JSCBs playing a role in the market by 2025. Policy Changes Bring Risks In 2010 Outstanding Loans, % change y-o-y Source: IMF International Financial Statistics

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Partial Table of Contents:

Executive Summary
- Table: Levels (VNDbn)
- Table: Levels (US$bn)
- Table: Levels At August 2009
- Table: Annual Growth Rate Projections 2010-2014 (%)
- Table: Ranking Out Of 59 Countries Reviewed In 2010
- Table: Projected Levels (VNDbn)
- Table: Projected Levels (US$bn)
SWOT Analysis
- Vietnam Commercial Banking SWOT
- Vietnam Political SWOT
- Vietnam Economic SWOT
- Vietnam Business Environment SWOT
Business Environment Outlook
- Commercial Banking Business Environment Ratings
- Table: Vietnam Commercial Banking Business Environment Rating
- Commercial Banking Business Environment Rating Methodology
- Table: Asia Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
Asia Banking Sector Outlook
- Table: Banks' Bond Portfolios
- Table: Asia Commercial Banking Business Environment Ratings
- Table: Comparison Of Loan/Deposit, Loan/Asset & Loan/GDP Ratios
- Table: Anticipated Developments In 2010
- Table: Comparison Of Total Assets, Client Loans & Client Deposits, 2008-2009 (US$bn)
- Table: Comparison Of Per Capita Deposits, 2010 (US$)
- Table: Interbank Rates & Bond Yields
Vietnam Banking Sector Outlook
Economic Outlook
- Table: Vietnam Economic Activity, 2007-2014
Competitive Landscape
- Market Structure
- Protagonists
- Table: Protagonists In Vietnam's Commercial Banking Sector
- Definition Of The Commercial Banking Universe
- List Of Banks
- Table: Financial Institutions In Vietnam
Company Profiles
- Vietcombank
- Table: Key Statistics For Vietcombank, 2004-2008 (VNDmn)
- BIDV
- Table: Key Statistics For BIDV, 2004-2006 (VNDmn)
- VietinBank
- Table: Key Statistics For VietinBank, 2005-2008 (VNDmn)
- Agribank
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Full Table of Contents is available at:
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