Banks shift business orientation

Wednesday, May 21, 2008
Difficulties caused by State Bank of Viet Nam's lending tightening up policies affecting to the banking sector's operation are getting more serious. Due to this, banks market share in two specifications of lending and capital mobilisation subject to the wholesale business has been narrowed gradually. In order to ensure revenue and profit targets approved by shareholders meetings, banks are speeding up boosting retail banking services.

Asia Commercial Joint Stock Bank (ACB) by the year early announced that it targeted the service growth of over 35% in 2008. Through gold trading floor, the bank earns a trading fee of one billion dong a day excluding interest rate of loans provided to gold traders. ACB reported that it would boost the retail services along with wholesale in the context that the market appears many obstacles for lending and capital mobilisation. Thus, ACB spent 1.1 trillion dong to invest and develop retail services in this year with the estimated revenue of 465 billion dong from service provision.

To gain the above target, ACB plans to expand the network to 204 branches and transaction offices by opening additional 93. During the past two-years, ACB's revenue from service provision always contributed 30% of total figure of the group. Currently, the bank has launched many retail finance services namely Home Banking, internet Banking, Phone Banking and others. ACB also pays much attention to individual customers after selling additional stake to the strategic partner of Standard Chartered (bringing the foreign bank's size in the local lender to 15%) with the target to become the leading retail bank in Vietnam in the future.

Tran Xuan Huy, Sacombank's general director revealed, his bank will increase the revenue from service provision by 15-20% against 10-15% growth of 2007. Up to the end of April 2008, Sacombank posted 58 trillion dong in total deposits, only rising by 20% from the year early and 40 trillion dong in outstanding loans, up 17%. Not only Sacombank but also most banks have to witness the narrowed market share of lending according to SBV�s lending limiting regulation.

On the other hand, domestic banks� market share in fields of lending and capital mobilisation is predicted to face a fierce competition in the near future with forthcoming 100% foreign owned banks, which force local banks to enhance retail banking services. According to Huy, Sacombank's strategy is to reach the allowable lending growth of 30%, growth of revenue from foreign currency business at 30% and that of retail banking services at 30%. Moreover, the local bank is going to obtain license to set up a card joint venture with ANZ.

Similarly, revenue from service provision also accounts for 15% to total revenue of Eximbank, reported the deputy general director Dao Hong Chau. Within this year, the bank is determined to focus on business of gold, foreign currency and import export payment that is targeted to grow by 40% and higher year-on-year.

EAB�s general director Tran Phuong Binh stated that international payment is always to be the key service to develop the corporate customers. EAB this year targets to reach the value of import export payment of US$2.4 billion, up 20% yoy and payment of overseas remittance at US$1.2 billion, and pre-tax profit of eight trillion dong, growing 76% against 2007. (DTCK)