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Infrastructure / Finance-Banking-Insurance

 Finance - Banking

Vietnam banking system has been increased both in scale and quantity over the last few years. The number of banks has increased from 9 (including 4 state commercial banks, 4 joint stock commercial banks and one joint-venture bank) in 1991 to 80 (including 5 state commercial banks, 37 joint stock commercial banks, 33 foreign bank branches, and 5 joint-venture banks) in 2007. Average growth rate in credit and bank deposits reaches 35% from 2002 to 2007. Total assets of the bank system in 2007 stood at 1,500 billion dong (equivalent to 95 billion USD or more than 130% GDP).

Asset and capital property scales of Vietnam banks have remarkably increased over the last few years though they are still lower than the region’s average level. Average charter capital of state commercial banks ranges from 5,000 to 10,000 billion dong and that of joint-stock commercial banks is from 1,000 to 2,000 billion dong while that of foreign bank branches and joint-venture banks is 15 million and 30 million USD respectively. Capital safety coefficient of state commercial and joint stock commercial banks is 9% and 12% respectively. The banks’ loan and capital mobilization market shares tend to move from state commercial banks to joint stock commercial ones i.g the loan market share of state commercial banks reduced by 55% from 77% in 2000 while that of joint-stock commercial banks increased by 29% in 2007 from 9% in 2000. Similarly, capital mobilization market share of state commercial banks down to 59% in 2007 from 77% in 2000 and that of joint-stock commercial banks increased by 30% in 2007 from 11% in 2000. State commercial banks have advantages of having long-standing and widespread operation networks while joint-stock commercial banks have been making efforts to expand rapidly their networks.


In recent years, much effort has been made by Vietnam’s commercial banks to increase payment rate, improve services, diversify products and services, and strengthen the application of hi-tech to meet customers’ demands and to enhance their competition. Basic services include card and card services (ATM and international credit cards). By December 31, 2007, there are 32 card issuance organizations with a total number of 8.3 millions; 4.300 ATM machines; 23.000 point of sales accepting credit-based payment (POS) nation-wide. Other banking services include account, saving, bill, loan, finance lease, voucher discount, international payment, money transfer, trade in foreign currency, agent service, etc are strongly developed. E-banking services such as home-banking, mobile banking, phone banking, internet banking and online payment are also being widely developed. However, products and services of Vietnamese banks generally have not been really diversified especially services and products of a modern retailed bank on the basis of developed technology.


State commercial banks (except for Vietcombank that has completed the equalization) are expected to complete their equalization in the coming time with the aim of developing quickly into multi-diversified financial corporations capable of providing financial services to customers that are big enterprises, economic corporations and to investing in projects. Meanwhile, the majority of joint-stock commercial banks tend to focus on retailed banks whose main customers are small and medium enterprises and individual customers. Strategy of joint-venture banks and foreign bank branches is to focus on 100% foreign capital enterprises, big Vietnamese enterprises and foreign and domestic individual customers with high income. Though, conditions to join the market has been adjusted to be much more strict, there are a series of proposals for permit gratification and branch opening from domestic and foreign banks.

Stock market


Vietnam Stock market officially transacts for the first time in July 28, 2000. Currently, there are two stock transaction centres in Hanoi and Ho Chi Minh city. By the end of 2007, Vietnam saw 253 listed organizations from 2 at the beginning. Total listed amount reached more than 5 billion stocks (equivalent to nearly 50.000 billion dong). In 2007, there were about 570 types of bonds listed in the stock market, worth more than 115.000 billion dong, accounting for 10% GDP. Capitalized scale of the stock market in 2007 was 43% GDP. The stock market has strongly developed and become a long-term and important capital mobilization channel for the economy.


As a characteristic of Vietnam Stock market, individual investors are major participants in the market, accounting for more than 90% of transaction accounts and nearly 70% of the total transaction amount of the whole market. By the end of 2007, total amount of transaction accounts reached more than 300,000. There are more than 8,000 transaction accounts of foreign investors (including about 500 organizations). Foreign investors are now holding 25% to 30% of stocks of listed transaction companies in which their transaction turnover account for nearly 20% of the whole market. Indirect investment list of foreign investors in the official market are estimated to reach 7.6 billion USD and the number can increase by nearly 20 billion USD if unofficial market is also reckoned.


By now, more than 90 stock companies have been granted with certification to operate in the market with total capital of nearly 15.000 billion dong. 34 investment fund management companies have been licensed with total capital of more than 1.000 billion dong. In general, stock companies have been very active in carrying out consultancy on equalization, listing, stock issuance and equalization auction.


However, rapid market development and limited I.T system of stock companies especially the overload of order, deposit and balance payment system has caused many obstacles to investors.



Vietnam’s Insurance service has been really developed since mid-1990s when the Government abolished monopoly in insurance business. Thanks to the market diversification and allowance to establish many more new insurance enterprises of various economic components, the insurance sector has strongly developed in many aspects such as market scale, the number of insurance enterprises, the number of laborers, product diversification and increasing improvement in policies. Insurance enterprises have also remarkably developed and adapted to the new competitive environment. By the end of 2007, Vietnam Insurance market included 23 non-life and 9 life insurance, one reinsurance, and eight insurance intermediary enterprises. Besides, there are nearly 50 representative offices of foreign insurance and insurance intermediary companies. Up to now, the insurance sector has nearly 100 different types of insurance products for the following three objects: i) human insurance, ii) property insurance and iii) liability insurance. However, satisfaction level is still rather limited.


In 2007, income in the non-life insurance reached nearly 8,360 billion dong, increasing 31% compared to the year 2006. It includes the following types: motor insurance of 2.250 billion dong (30.5%); technical insurance of 1,546 billion dong (18.5%), human health of 1,203 billion dong (14.4%); fire, explosion and any special risk insurance of 1,022 billion dong (12.2%), ship body and civil liability of ship owner of 809 billion dong (9.7%), transportation good insurance of 712 billion dong (8.5%) and other types of insurance such as aviation, liability, financial risk, business discontinuation, agriculture, etc. of 517 billion dong (6.2%).


In 2007, life insurance market continued to develop along with socio-economic growth with more and more middle-class income people, more demands for high quality health insurance and higher retirement insurance than social insurance (20 times of the minimum salary). However, life insurance still has to compete with many other growing financial services with high interests such as stock and saving deposits. In this context, life insurance enterprises have introduced new insurance products including: life-long flexible insurance, finance-based insurance to carry out big future work (sending children abroad, house and car purchases), retirement insurance with the higher amount than the ceiling level of social insurance for high income people and talented people that employers need to maintain, etc). At the same time, insurance enterprises have unceasingly increased quality of agent recruitment and training to provide better customer services in terms of popularization, explanation and consultation. Life insurance income in 2007 reached 9,397 billion dong, increasing 12% compared to 2006. Total number of effective contracts by the end of 2007 was more than 7.3 million. There were also more than 72,000 agents in all. Life insurance enterprises own a total capital of nearly 4,700 billion dong with more than 2,000 billion dong of before tax income.





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