Asiamoney best bank awards 2018: Vietnam
Best domestic bank: Vietcombank
Vietnam is a country on the move. Inflation is under control, unemployment is low and growth is tipped by the IMF to come in at 6.5% this year and next. Now the country just needs a good banking sector.
Fortunately, it has a few standout lenders, notably Vietcombank. Since Vietnam’s 2012 banking crisis, it has husbanded its resources wisely, resolving bad loans and investing in digital.
In April this year, it received approval to sell a 10% stake to up to 10 foreign investors. Japan’s Mizuho already owns a 15% stake, which it bought in 2011.
With more than eight million retail customers, Vietcombank has the scale and the numbers to justify this award. Its market cap at the end of June was D207 trillion ($8.9 billion), putting it ahead of its peers, both state-run and privately owned. Total assets increased 31.4% year on year in 2017, deposits rose 21% and its retail loan book jumped 53%.
That continued into 2018, with pre-tax profits up 52.7% year on year in the first half – the biggest percentage increase of any onshore lender.
Its return on assets hit 1.24% at the end of June, while its return on equity was 22.71%, higher than any of its rivals. And its net interest margin, which has been rising since 2012, was 2.76% at the end of the first half, versus 2.66% six months earlier.
Even non-performing loans, a long-standing problem, seem to be under control, falling to a record low of 1.11% at the end of 2017.
That Vietcombank is the country’s best lender is a view shared by its peers. They have “good management, strong links to government, a good brand, lots of branches, and real scale”, observes a banker at a rival institution. “There’s a lot to like about them.”
Best corporate and investment bank: Credit Suisse
Every year, Vietnam’s capital markets take the next step in their long-term development, growing in size and maturity. And each year, investment bankers fight tooth and nail over the deals that pepper the market: a few chunky IPOs and equity placements here; a couple of government debt sales and syndicated loans there. It all adds up.
Le Hoai Anh
This year, the award for best corporate and investment bank goes to Credit Suisse, which has out-thought and out-performed all of its rivals. If a big deal stormed the market, chances are Credit Suisse was involved. Take the $2.2 billion equity raise in May for Vinhomes, the largest-ever onshore equity offering and the biggest southeast Asian real estate deal since 2010.
The Swiss institution was sole adviser to the residential property firm’s parent Vingroup on the strategic investment by GIC and joint global coordinator on Vinhomes’ subsequent $1.35 billion initial equity offering.
It was sole bookrunner and lead manager on another landmark deal, the concurrent $160 million convertible bond and $150 million equity placement by property firm Novaland in April, and was mandated lead arranger and bookrunner on consumer finance FE Credit’s second international syndicated loan transaction in June 2017, a deal that was increased to $185 million from $100 million because of the strong demand.
Under the guidance of Vietnam IBCM coverage head Le Hoai Anh, Credit Suisse has become the investment bank to beat, pipping Deutsche Bank to first place in the equity capital market rankings in the 12 months to the end of May, according to Dealogic, and trouncing all other comers in M&A.
Best international bank: Standard Chartered
Some international lenders don’t quite know what to make of Vietnam. Perhaps the last great, untapped emerging market, it is bursting with potential, but still a work-in-progress. It oozes growth and entrepreneurial spirit, yet the capital markets are young and there are precious few firms of genuine scale.
Faced with this situation, some lenders prefer to dip only one toe in, focusing on investment banking or premium retail services, say, or facilitating the vast inflows of foreign direct investment. Standard Chartered is one of the few international lenders of scale to commit fully to the fast-growing Asean market.
Wherever you look, you see it at work, creating new jobs (600 added to its domestic roster in the 12 months to the end of May), working with the government as the sole sovereign credit ratings adviser, and increasing its capital base. (It raised its onshore charter capital to $156 million from $136 million in February, and aims to take that to $186 million, an investment that, the bank says “reinforces [our] long-term commitment to Vietnam”.)
StanChart’s Vietnam chief executive, Nirukt Sapru, notes that the bank was one of the first to re-enter the country and to turn its domestic operations into a subsidiary, in 2009.
“Our business is very well balanced between corporate, commercial and retail,” Sapru adds. “We are one of the biggest and fastest-growing foreign banks here and consider ourselves the go-to bank for foreign investors into Vietnam and for Vietnamese looking to do business with the world.”
A regular participant in the chunky equity and debt deals that pepper the market, Standard Chartered is a leader in other ways, too, investing $2.2 million between 2016 and 2018 in the ‘Seeing is believing’ programme to provide eye care to children and the elderly.
It holds an 85% market share for open-ended funds and a 90% market share for exchange-traded funds. It was Vietnam’s leading financing bank in the 12 months to the end of May, according to Dealogic, ahead of Credit Suisse and Maybank.
Best digital bank: Citi
Digital banking, a slow burn in Vietnam, finally seems to have taken flame. In recent years, domestic banks have been frantically rolling out new online services to demanding customers. Some of these underwhelm, while others, such as privately run VPBank’s digital channel Timo, impress. But none can hold a candle to Citi. The US lender, a growing digital force across Asia, clearly sees Vietnam as a key part of its regional strategy. It uses its local Facebook page (launched four years ago and with 190,000 fans) to target customers and reinforce its brand, then focus on the sale (the digital contribution to Citi’s credit card acquisition rate rose 29% year on year in 2017).
Elsewhere, Citi has embedded itself into customers’ daily routines, launching a partnership with ride-sharing platform Grab and e-commerce group Lazada Group in six southeast Asian markets, including Vietnam. Downloads of Citi’s mobile app rose 78% year on year in 2017, with use of the application up 87%.
The bank continues to work hard to ensure that a conversation that begins on one digital platform can finish seamlessly on another, be it tablet, desktop or mobile phone – the latter being the fastest-growing digital channel at Citi Vietnam.
Talking to Asiamoney in Ho Chi Minh City, Natasha Ansell, country officer at Citi Vietnam, said that of the bank’s 140,000 retail customers, about 80% use its various digital banking channels. It continues to improve and expand its mobile offering, with pre-approved loans to Citi credit card and Ready Credit customers who apply via their cellphone or computer.
With Citi constantly rolling out new online services that can easily be adapted to other markets, the bank looks well set to remain a leading digital bank both here and regionally for years to come.
Best bank for SMEs: VietinBank
This may well be the toughest award to win in Vietnam. Over the last decade, the government has focused its attention on the country’s army of small and medium-sized enterprises, reckoned by the Credit Information Centre to number 500,000. Banks are tacitly encouraged to lend to them and to offer preferential rates to borrowers.
This award garnered more interest than any other – underlining the importance of being, and of being seen to be, the best onshore SME lender.
Le Duc Tho
But there can be only one winner, and this year the award goes to VietinBank, led by chief executive Le Duc Tho, which banks 186,000 smaller enterprises, or 37% of the nation’s total, according to director of SME lending Nguyen Thu Hang. Total outstanding loans to smaller corporates came in at D207.2 trillion ($8.9 billion) at the end of May, up 30.2% over the previous year, with total mobilised SME funding rising 35.2% over the same period, to D84.5 trillion.
New services that cater to the needs of smaller corporates include fixed-rate loans, a companion scheme that offers preferential lending and deposit rates to firms that use VietinBank as their primary lender, and credit insurance that protects SMEs from delinquency.
Another new scheme, VietinBank SME Club, launched in July 2017, offers a suite of VIP services to 800 elite SMEs – targeted firms with the talent, drive and ambition to become larger, influential corporates in their own right – including incentive programmes, professional training programmes, seminars and conferences.
Hang points to the increasingly international focus of the bank’s best SME clients. “We’re working with them in markets like Laos, Myanmar and Germany,” she says. “We outperform every other bank in this category.”
Best bank for CSR: Saigon Hanoi Commercial Joint Stock Bank
Corporate and social responsibility is still a relatively new thing in Vietnam. Most banks channel a portion of their capital to worthy causes, but their limited resources are often spread thinly: many seeds are scattered in the hope that a few will grow. Saigon-Hanoi Commercial Joint Stock Bank (SHB), led by chief executive Nguyen Van Le and one of the country’s big-five privately owned lenders by assets, has opted for a more systematic approach to CSR. Over the past year, its ‘Love sharing’ and ‘Wings of faith’ programmes sent D5 billion ($215,000) worth of gifts (clothing, books, food) to the children of disadvantaged families, while also delivering invaluable leadership skills and lessons.
Nguyen Van Le
But it is in the arena of financial inclusion that SHB really stands out. In recent years, it has focused on disbursing capital to the coffee farmers whose efforts have transformed Vietnam into the world’s second-largest producer of the lucrative cash crop.
Production is mostly located in the mountainous Central Highlands region. Remote and sparsely inhabited, coffee is still largely grown using traditional methods. Money is scarce, modern farming equipment rarer still, and farmers have little in the way of equity or collateral. So SHB has dug in and helped out. With the mantra ‘No one gets left behind’, it has rolled out products that help household firms with low credit accessibility and brought under-banked and unbanked small firms into the formal financial system by offering short- and medium-term loans (such as industrial crop financing) at preferential interest rates.
By March, total bank lending to 200 coffee growers in five central provinces was D50.66 billion, accounting for 7.2% of outstanding household business and individual loans. A worthy programme from a thoughtful institution.