Military Bank: Tying Business Interests with Social Responsibility

The Vietnam Gold Star Award is a noble award as it is granted on the basis of evaluations on corporate competitiveness, performance, and contributions to economical and social development.

 

Without doubt, MB is a top commercial lender in Vietnam. Its growth indicators outdo the banking industry. At present, apart from competing with other Vietnamese lenders, MB has to compete with foreign banks and other financial institutions. Furthermore, we plan to expand our presence to regional countries. We have opened a branch in Laos and will launch another one in Cambodia in 2011 before stepping into other markets in the near future.

 

Definitely, the Vietnam Gold Star Award is rewarded to right winners. MB has always worked with its best capacity for years and deserved the merit. The voting and honouring of banks and other companies as well is a pride and a motivation for companies to enhance their competitiveness, try to hold on the title, contribute to the national development, and be responsible to the community and the society.

 

The Vietnamese economy encountered numerous difficulties in 2011 because of severe impacts of the global economic crisis. In Vietnam, inflation started to escalate at the end of 2010, forcing the Government to adopt the Resolution 11 with the keystone contents of curbing inflation, stabilising macro economy and ensuring social security. Then, the Governor of the State Bank of Vietnam issued the Directive 01 to guide the serious implementation of the Resolution 11. The resolution closely tied monetary policy to fiscal policy. To contain inflation, credit growth of commercial banks cannot exceed 20 percent. Banks have to lower credits for non-manufacturing sectors (e.g. consumption, real estate and securities) to 22 percent or lower of outstanding loans as of June 30, 2011 and to 16 percent or lower as of December 31, 2011.

 

As known, the property market in Vietnam was a money spinner for investors. The capital for this market is huge. Indeed, funds for the property market should come from investors, the public (savings), capital markets like stock, bond and financial markets. But now, the real estate market is primarily reliant on bank credits while which bank credits are in essence short-term loans. Hence, to develop the stock market more strongly and unlock its potentials, it is necessary to create more funding channels.

In 2011, the Government directed the State Bank of Vietnam to give credit priority to manufacturing sectors while restraining funds for property market, thus resulting in daunting difficulties and challenges for real estate businesses. But, when the property market meets with troubles, it will adversely affect other markets and the banking sector is no exception. Hence, policies of the State and banks themselves must be rational to ensure the policy of the government while facilitate the development of real estate market. In fact, if real estate companies only borrow for their investments while their financial capacity is weak, they will be the first to be hurt when the economy is unfavourable. Meanwhile, companies with strong financial capacity and good business orientations still maintain their growth momentums, even take over smaller businesses.

 

To implement the Government’s Resolution 11, the Governor of State Bank issued the Directive 01 on ceiling rates of deposits in Vietnamese dong (at 14 percent per annum). As the economic situation was very difficult in the first months of the year caused by soaring inflation which topped 15 percent in the first four months and rose 23 percent year on year in April, banks would not have mobilised deposits if their rates had not been high enough. As a result, some banks still infringed the spirit of the Directive 01.

 

Recently, the Governor issued the Directive 02 but it essentially repeated the contents of the Directive 01 and added ironclad punishments on violators. We think this is a very good ruling and absolutely agree with the State Bank’s solutions on hopes of stabilising the monetary market and strengthening the prestige of the banking sector. MB is now in the Group of 12 (12 largest commercial banks) which are summoned by the Governor to discuss solutions for the rest of the year and discuss measures to align deposit rates. Our branches strictly implement the Directive 02.

 

If the awardee is a powerful and well-reputed company, apart from its contributions to the national economic development, it must have an apparent responsibility: Positive contributions to the society. For years, MB has performed its responsibility to the society. It set up the “Golden Heart” Fund donated by the bank itself and its employees. This year, it donated VND15 billion for Truong Sa and extracted VND1 billion to build houses for the Defense Ministry, build houses for border soldiers. The bank also actively granted aids to flood victims, AO victims and families with martyrs. With its corporate social responsibility, MB hopes to ease difficulties in the society and adorn the society. MB would like to express its gratitude to customers for their travelling with us.