Foreign investors are now keen on investing in Vietnam’s banking and financial sector as the country is now opening the market for them, managing director of the US Financial Consultancy Company Bradle C. Lalonde said in an interview with a local newspaper.
The average growth of between 27 per cent and 30 per cent in recent years has made the financial and banking sector become an industry to achieve strong development, he said, adding that it was drawing attention from foreigners.
The banking sector has obtained net profits with the highest level over equity capital, an increase of up to ten times more than that of other industries in Vietnam.
Lalonde, with a great deal of experience in Vietnam’s banking sector, said that the Vietnamese Government’s program to re-organize joint stock commercial banks from 1998 has lowered the number of commercial banks from 50 to 36.
These banks have much higher quality, with their equity capital accounts for at least 80 per cent of total assets, the net profit over assets made up at least 15-17 per cent on average and up to 40 per cent for some banks.
This is the highest rate so far and it is real result and real business opportunity, he confirmed.
With these positive figures, there are many investors interested in pouring their capital into the sector, he said.
Vietnam will be able to mobilize billions of US dollars from both domestic and foreign capital sources to expand operations as well as to reform banking system.
In fact, 29 foreign bank branches have entered Vietnam, including some large financial organisations such as Standard Chartered Bank, International Finance Corp. (IFC) and Dragon Capital.
These credit institutions prefer to buy shares of local commercial banks as much as possible in order to take part in management system, Lalonde said.
Although foreign investors are only allowed to buy up to a 30 per cent stake in a Vietnamese bank, they have tried to acquire their portion as the first steps to penetrate into the market.
Foreigners will invest more in the banking sector if local banks conduct privatization and list on stock exchange, the official said.
However, the decisive factor to attract foreign investment depends on the business strategy and management system, including expense control, credit risks and staff training. Local commercial banks, therefore, have to enhance their credit management and rearrange their structure, Lalonde stressed.
Vietnam Economic Times
Vietnamese
