Foreign Credit Institutions Performing Well in Vietnam 

 

Almost all foreign-invested credit institutions have continued their businesses in Vietnam and were estimated to make significant growths in 2004, according to the Vietnam central bank's report summing up operations of these organizations so far this year.

According to Head of Banking Department under the central bank Kieu Huu Dzung, two foreign banks (from the US and Japan) opened and one closed their branches (Credit Lyonnais for merging with Credit Agricole Indosuez) in Vietnam this year. The total number of foreign-invested credit institutions' branches operating in Vietnam reached 27.

The number of joint venture banks remained unchanged at four while there are now still three foreign-invested financial leasing companies, Mr. Dzung said. Total representative offices of foreign banks increased by two (one from Taiwan and one from Japan) to 44 in Vietnam, he added.

All foreign-invested credit institutions operated safely in the first 10 months of 2004 and are developing. They effectively supported foreign investors in Vietnam, transferred advanced banking technologies for local banks and helped boost trade between Vietnam and other countries.

The report detailed that as at October 31 total mobilized capital of the 27 foreign bank branches (almost in foreign currencies) rose by 36 per cent against the same period last year, accounting for 8.24 per cent of the total money raised by the banking system.

Meanwhile, the 27 branches reported an on-year rise in total outstanding loans of 31 per cent, compared with a year-on-year increase of 21 per cent in 2002, making up 8.26 per cent of total lending of Vietnam's banking system.

Credit quality of the group [the 27 branches] is sound with bad debt ratio continued decreasing to 0.16 per cent, compared with a rate of 0.26 per cent in 2003. It also recorded an on-year increase in gross profit of 30 per cent, compared with growth of 15 per cent in 2003.

Regarding the operation of joint venture banks, as at the end of October 2004, the four joint venture banks had 12 branches in major cities, up from 11 in last year. Two of the joint venture banks raised registered capital in the period, bringing total capital of the four banks to US$85 million, up 11.3 per cent on-year.

Total mobilised capital of the group (the four joint venture banks) had risen by 23 per cent on-year and outstand loans by 25 per cent with clients mostly being foreign-invested enterprises while the bad debt ratio decreased sharply to 0.24 per cent. All joint venture banks made profits in the period, rising by 57 per cent on-year, compared with last year's profit growth of 23 per cent.

On the operation of foreign-invested financial leasing firms, as at October 30, their raked-in capital rose by 5 per cent on-year, outstanding loans up 50 per cent and pre-tax profits up 89 per cent.

Meanwhile, 44 rep offices of foreign banks operated effectively. They play a role as bridges for foreign investors to enter Vietnam. Via those offices, a series of foreign lending projects and credit agreements were signed. They also helped Vietnamese banks to train staff.

At the end of the report, Vietnam's central bank and the government pledged to continue boosting administrative reform to create a more favourable business environment for foreign investors, including foreign-invested credit institutions.

• Le Dung