Experts discuss investment opportunities in Vietnamese banking stocks at Fiinpro Talk 6 in HCM City on April 19. (Photo: Stoxplus) HCM City (VNA) - The banking sector willenjoy another strong year in 2018, experts told a seminar in Ho Chi Minh Citythis week.
Speaking at Fiinpro Talk 6 on “Vietnamese bankingstocks: investment opportunities and risks,” Nguyen Anh Tu, Deputy Director Generalof the State Bank of Vietnam’s Monetary Policy Department, said banking stocksdid well in 2017 thanks to a favourable economic environment with a positiveoutlook for growth, well-anchored inflation, improved management of banks,better supervision by the Government, and a decrease in non-performing loans.
With economic growth expected to be even betterthis year, it would be another good year for the banking sector, he said.
Banks are more likely to make a profit on the backof a strong economy since it stimulates demand for credit, and Vietnam is abank-based economy with 92 percent of capital in the economy provided by banksaccording to the National Financial Supervision Council, he said.
Retail lending is increasing due to demand fromnewly-established small businesses and SMEs, which have traditionally found itdifficult to get corporate loans from banks, and increasing consumption byindividuals due to positive expectations from the economy and rising affluence,he said.
According to a report from the Boston Consultantgroup, the size of the middle- and upper-income classes in the country willreach 33 million by 2020, creating huge demand for financial and insuranceservices.
According to data compiled by StoxPlus from 18banks, who account for 60 percent of the country’s loans, retail loans aregrowing at double the rate of corporate loans, and increased their share to 37percent of total loans.
“Consumer finance has been growing rapidly andplaying a part in the parent banks’ story,” Nguyen Quang Thuan, CEO offinancial and business information provider StoxPlus, said.
He cited the example of FE Credit, the consumerfinance arm of Vietnam Prosperity Joint Stock Commercial Bank (VP Bank), whichaccounts for the majority of its parent company’s loans and helps VP Bankimprove its earnings.
Similarly, HDBank owns HD Saison, a growingconsumer finance company.
Besides, lenders like Techcombank, Sacombank, VPBank, SHB, and Military Bank have posted significant commission incomes fromtheir partnerships with life insurers last year, he added.
Speaking about banking stocks, he said: “[They]still have some room to play.”
He said banks are buying back their bad debts fromthe VAMC to collect them while their income from lending would remain at around3 percent.
Fees earned through partnerships with third partyfinancial services providers would drive the earnings growth of banks,especially those with large customer bases, he added.-VNA
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