VietNamNet Bridge - Vietnamese commercial banks have been taking cautious steps to exploit foreign markets in an effort to seek new business opportunities.

The banks’ outward investment wave began in 2008 and has become stronger in the last four years. 

Vietcombank now has a representative office in Singapore and subsidiary in Hong Kong, while BIDV and Saigon-Hanoi Bank (SHB) have branch and representative office in Cambodia. Sacombank and Military Bank opened branches in Laos and Cambodia. In the latest move, Sacombank has turned its branch in Cambodia into a 100 percent Vietnamese owned bank which has 7 branches in Phnom Penh and key provinces.

VietinBank, one of the largest banks in which the state holds the controlling stake, has opened branches in Berlin and Frankfurt in Germany. The bank has also reached to Lao, Singaporean and French markets.

Most recently, in mid-May 2016, the opening ceremony of BIDV’s representative office at the Hanoi-Moscow Trade Center took place with the witness of the Vietnamese Prime Minister Nguyen Xuan Phuc. With the event, BIDV has become the first Vietnamese bank with a presence in Russia, which it targets as the key market.

Vietnamese commercial banks have been taking cautious steps to exploit foreign markets in an effort to seek new business opportunities.

Vietnamese banks have reaped fruits from their overseas investments. Pham Xuan Son, director of SHB’s Cambodian branch, said that after four years of operation, the bank’s total assets had reached $240 million by the end of 2015. It reported mobilized capital of $21 million, outstanding loans of $205 million in 2015 and the profit of $2 million. Meanwhile, the non-performing loans ratio was very low at 0.05 percent.

An analyst commented that ASEAN countries were the target markets for most of the banks which have made outward investments. ASEAN member countries are located near Vietnam, while they have similarities in culture and business culture.

BASEAN is also a large market for Vietnamese import/export companies. The presence of Vietnamese banks would be necessary to satisfy the companies’ demand for capital, payment and forex trading services. 

Bui Kien Thanh, a renowned banking expert, commented that expanding business scale overseas can bring many benefits. Banks can have more markets, more clients and more opportunities to popularize their brands, which all help improve competitiveness.

This will also help disperse risks and heighten business efficiency, allowing Vietnamese banks to become financial groups with international stature.

However, Thanh warned that there were risks latent in the investments.

Vietnamese banks have to face differences in culture, language and legal framework, while they have to compete fiercely with local banks. This explains why Vietnamese commercial banks mostly target countries with lower development levels or markets with high population of Vietnamese. 

Luong Bang