Market and Competitor Analysis

Week 3 May 2014

Market and Competitor Analysis

Weekly Updated
OVERVIEW
ISSUER OF THE ANALYSIS:
 Future houses will be collateralised at a CI. Therefore, the regulation
Strategic Research & Analysis allows people to easily borrwo money from banks to buy houses. We
Finance & Strategy Division also see that some banks have been deploying many lending programs
Address: Level 20, Techcombank for buying houses at preferential interest rates and long tenors. Besides,
Tower, 191 Ba Trieu, Ha Noi
the lending model of 4-party connection also attracts huge interests
Tel: +84 4 3944 6368
from banks, real estate businesses and people. Therefore, the real estate
market is expected to recover quickly in the near term.
 Hanoi will deplou the bank – business connection program. Following
the success of HCMC, Hanoi will deploy the program to push credit
growth for businesses and promote production and trading. During the first
year of deploying the program, banks in HCMC funded VND 13,700
billion for 654 businesses at the interest rates of 9-12%/year. The program
has help businesses in recovering and promoting production and trading. In
2014, SBV in HCMC set the target of VND 20,000 billion lending to
businesses in the program.
 Banks will succeed in the retail segment if always improving the
cusomter experience. This is the conclusion of the report on E&Y Global
consumer banking survey. Especically, in Vietnam, the proportion of
customers that are willing to change bank is really high. Therefore, banks
should promote investments in technology to enhace the experience of
customers such as: diversified retail products, ATM system, internet/mobile
banking that are worth the fee paid…Also, E&Y emphasises in making a
difference since banks are providing similar services.
 Interbank activities continue to decline sharply. According to statistics
from Top 11 commercial banks, total deposits at / loans from CIs have
declined sharply compared with year-end 2013. In particular, total
deposits/loans to CIs declined by 20.4%; total deposits/loans from CIs
declined by 10.4% compared with year-end 2013. VCB, EIB, STB and
SHB are banks with the highest decrease in interbank activities.

Hoàng Quốc Đông

Director of Strategic Research & Analysis
Email: donghq@techcombank.com.vn
Tel: +844 39446368, Ext. 1243
Lưu Trung Nguyện
Analyst
Email: nguyenlt2@techcombank.com.vn
Tel: + 844 39336368 Ext: 1244
Nguyễn Thu Bình
Analyst
Email: binhnt9@techcombank.com.vn
Tel : + 844 39336368 Ext: 1247

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Strategy and Corporate Development
 Market and Competitor Analysis
Week 3 May 2014

DEVELOPMENTS OF MARKETS AND POLICY

Future houses will be used On April 25th, SBV, Ministry of Justice, Ministry of Natural Resources and
as mortgages at one CI Environment, Ministry of Construction signed a joint circular 01/2014/TTLT-
NHNN-BXD-BTP-BTNMT guiding the procedure of using future houses as
mortgages. The Circular takes effects from June 16th 2014, including the
following basic contents:
- Future houses that can be used as mortgages as a CI are houses bought
from real estate trading companies in a housing investment project
- Collateralisation conditions:
(i) Have the technical design approved
(ii) Have the foundation built
(iii) Have the sale and purchase contract with the real estate company
signed in accordance with the law on housing or have the houses
transferred to the buyer but yet verified by a competent state agency
(iv) Not being distrainted by enforcement or to abide the decision of a
competent state agency
(v) Future houses are of a housing investment project that has been
verified by a competent state agency
- The circular makes no adjustment for collaterisation of future houses of
househoulds, individuals built on their legitimate lands to borrow money
from CIs
Hanoi deploys the bank- Recently, the Hanoi People’s Committee has approved the plan of deploying
business connection bank-business connection program. Accordingly, the main contents are as
program follows:
- Targets: businesses operating in Hanoi that are of five prioritised sectors:
agriculture, rural; exports; supporting industries; small to medium
enterprises; businesses applying high technology
- Incentives: Lending interest rates of 7%-8%/year for shor-tem loans and
9%-10.5%/year for medium- to long-term loans
- The Hanoi People’s Committee asks the districts to resolve procedures
quickly for businesses having demand for borrworing capital. Besides,
Hanoi will organise conferences to find solutions to remove difficulties
and obstacles between businesses and banks
Banks will succeed in the On April 21st, in Ha Noi, E&Y Viet Nam announced the report on Global
retail segment if always Retail Banking Survey. Accordingly, the number of participants of this survey
improving the cusomter over the world is 32,000 people. Some notable information from the report are
experience as follows:
- The percentage of people willing to change the bank in Viet nam is 67%-
the highest proportion in Asia. Some reasons considered are as follows:
(i) There are too many banks, financial companies and other similar
service suppliers
(ii) Banking products are still basic. The service quality of banks is not
very good, especially the quality of ATM and mobile banking is not
commensurate with the current fee
- Approximately 75% of Vietnam’s population does not have bank
accounts, hence, this is a very big opportunity for banks to develop retail

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Strategy and Corporate Development
 Market and Competitor Analysis
Week 3 May 2014

banking system
- 82% of customers are willing to introduce their banks to others, higher
than in other countries’. The reason is that customers want to transfer all
services to one bank instead of using many different banks
- Approximately 50% of customers are using ATM service every week.
This shows that customers increasingly tend to use the bank service that
they can do by themselves instead of having to interact directly with banks
by traditional methods
SBV pilots the connection On May 15th, Director of Credit Department disclosed that SBV is doing pilots
model in agriculture on a lending policy to develop connection model in algriculture. Accordingly:
- Objectives of this program:
(i) Reduce input fee for products of linking manufacture by lending at
suitable preferential interest rate
(ii) Remove obstacles about Collateral by unsecured credit for farmers
- Features of this program:
(i) Have direct loans for enterprises to support for farmers
(ii) Have intensive loans on contractual links between enterprises and
farmers, then control tightly cashflow in linking chain.
(iii) Have certain supports for chosen enterprises in this pilot about capital
sources. Interest rates and tenor, collateral.
- This pilot takes place in about 2 years, then SBV will summarise and
implement nationwide
Updates on activities of commercial banks in Quarter 1/2014
Balances with and loans to other CIs Deposits and borrowings from other CIs
Banks
31/12/13 31/3/14 +/- % 31/12/13 31/3/14 +/- %
BIDV 48,838 57,703 18.2% 47,378 60,747 28.2%
CTG 73,246 69,100 -5.7% 80,465 72,340 -10.1%
VCB 90,781 52,947 -41.7% 44,118 25,556 -42.1%
ACB 7,627 7,680 0.7% 7,801 9,213 18.1%
EIB 57,874 40,359 -30.3% 65,767 56,810 -13.6%
MBB 26,447 23,941 -9.5% 21,402 15,536 -27.4%
STB 7,992 6,531 -18.3% 4,753 3,688 -22.4%
TCB 15,419 13,972 -9.4% 15,225 16,198 6.4%
SHB 30,286 11,350 -62.5% 20,685 3,181 -84.6%
VPB 11,797 11,732 -0.6% 13,134 17,864 36.0%
VIB 7,967 5,835 -26.8% 19,036 23,253 22.2%
Total 378,274 301,150 -20.4% 339,763 304,386 -10.4%

INFORMATION ON PROGRAMS, PRODUCTS, NETWORK…OF TCB AND COMPETITORS

From May 23rd, Techcombank deploys a preferential lending program for
buying apartment in Times City –Ha Noi with notable content as follows:
- Limit: up to 70% apartment value
- Preferential interest rate: from 3-7% in the first year
- Tenor: up to 20 years

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Strategy and Corporate Development
 Market and Competitor Analysis
Week 3 May 2014

From June 1st to September 30th 2014, Agribank deploys a preferential lending
program for import-export customers in 2014 with notable information as
follows:
- Target: customers having loans for import-export purposes.
- Lending interest rate: from 6-8%/year
- Tenor: up to 6 months

From May 22nd, MBBank deploys a 3,000- billion preferential credit package
with notable information as follows:
- Target: personal customers
- Interest rate:
(i) From 8%/year, apply for up to 12 months, or
(ii) Fixed preferential interest rate during loan term, apply for up to 20
years
MBBank also implements 2 flexible lending packages for short or mid-long
term as follows:
- Short- term loan with tenor of less than 1 year:
(i) In 1/3 lending term, apply interest rate of at least 8%/year
(ii) Time left: interest rate = interest of 12-month VN deposit + margin
3.5%
- Mid-long term with tenor of more than 1 year:
(i) In the first 6 months or in the first 12 months but not exceeding 1/3
lending term, apply interest rate of at least 8%/year
(ii) Time left: interest rate = interest of 24-month VN deposit (interest
paid after) + margin 4%
Other banks From May 22nd 2014 to December 2014, Saigon Commercial Bank (SCB)
deploys a product package named “ Give Guarantee- Develop success” with
main information as follows:
- Target: Organiszational customers
- Preference:
(i) apply term interest rate for guarantee deposit
(ii) reduce fee up to 25% on letter of guarantee
(iii) reduce fee up to 20% on accumulated guarantee volume of customers
(iv) finance up to 100% value of pass book/Deposit Contract/Valuable
papers issued by SCB
Oceanbank has implemented a program named “1 billion deposit, 1 gold
thread as gift”1with notable content as follows:
- Target: customers open pass book in Oceanbank for the first time
- Preference: customers have a deposit of 1 billion VND with tenor from 6
months would be given 01 gold thread 9999 (or a pass book with
equivalent value)
Moreover, customers have saving accounts from 10 million VND, tenor from
6 months would be given money into accounts or received a joint pass book
with value up to 2.4 million VND based on orginal saving account.

1
Vietnamese measurement: 1 gold thread= 3.75gr of gold

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Strategy and Corporate Development
 Market and Competitor Analysis
Week 3 May 2014

MHBank is implementing a series of lending program with notable content as

follows:
- Preferential rate: 8.5%/year for small enterprises having loans in million
VND
- Preferential rate from 0.49% to 0.69%/month (equivalent to 5.88%-
8.28%/year) for persomal customers having consumer financing, for
enterprises to invest in fix assets or adding capital in short term.

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Strategy and Corporate Development