How are foreign banks performing in Vietnam?

HSBC pested from Techcombank, while Commonwealth Bank transferred the HCMC branch to VIB and BNP Paribas sold its 18.7% stake in OCB after one decade of being a shareholder of the bank. Standard Chartered sold all the 8.75 shares of ACB.

While many banks withdrew their capital from Vietnam banks, the number of 100% foreign owned banks set up in Vietnam has increased recently. In 2016-2017, four more banks were licensed in Vietnam.

There are nine wholly foreign owned banks in Vietnam, HSBC, ANZ, Standard Chartered (UK), Shinhan (the Republic of Korea), Hong Leong (Malaysia). Public Bank Berhard (Malaysia), Woori (the Republic of Korea, CIMB (Malaysia) and UOB (Singapore).

The total assets of foreign invested banks, including 100% foreign owned and joint venture banks, had reached VND954.165 trillion by the end of 2017, while the regulatory capital was VND141.838 trillion and chartered capital VND109.656 trillion.

While Vietnamese banks are struggling to increase their chartered capital so as to meet the requirements on the capital adequacy ratio (CAR) in accordance with Basel II, foreign banks are at ease with the CAR at 29.11%, which is three times higher than Vietnamese state-owned banks and 2.5 times higher than private Vietnamese banks.

The latest report by the State Bank of Vietnam showed that, as of the end of the third quarter of 2017, the ROA (return on asset) ratio of foreign-invested banks was 0.74%, higher than the 0.46% of state-owned banks and 0.5% of private banks.

Meanwhile, their ROE (return on equity) was 4.57%, lower than the 9.06% of state-owned banks and 7.07% of private banks.

There is not much information about the performance of foreign banks. HSBC, ANZ and Shinhan Bank release annual finance reports, but these are brief reports with no explanations.

HSBC has had the longest presence in Vietnam with its first office opened in Sai Gon in 1870. It got permission to set up a 100% foreign owned bank in 2008.

By the end of 2017, its total assets had reached VND87 trillion, up by 2.4 times after 10 years of establishment, while chartered capital has increased from VND3 trillion to VND7.528 trillion.

HSBC Vietnam reported the pre-tax profits of VND2.2 trillion in 2017, or 24% higher than 2016.

ANZ also made a fat profit in 2017 with VND1.335 trillion, a sharp increase of 2.3 times over 2016.