Nielsen VN - Personal Finance Monitor Mid-Year 2010

Personal Finance
Monitor
Mid Year - 2010
Personal Finance Monitor 2010

Copyright 2010 The Nielsen Company. Confidential and proprietary.
Vietnam is Heating Up!

Healthy GDP grows in both urban & rural areas Vietnam is currently ranked equal #2 in the world on Nielsens consumer confidence index Business leaders continue to show bullish expectations for business growth over the next 12 months Well over 50% of total population is under 30 years old

Vietnam Population Male Female Urban 2009 Rural 2009 GDP growth rate Inflation rate Wage growth Key cities:
2010 Estimates 87 millions 43.1 millions (49.5%) 43.9 millions (50.5%) 29.6% 70.4% 5.5% 10% 12.3%
Nhatrang Danang Hanoi
Haiphong
Ho Chi Minh Hanoi Haiphong Danang Nhatrang Cantho
Cantho Ho Chi Minh

A young population means an increase in purchasing power as it joins and progresses in the workforce
Total Vietnam Population
Male Vietnam 2009 Female Population under 30 years old: 56%
80+ 75 - 79 70 - 74 65 - 69 60 - 64 55 - 59 50 - 54 45 - 49 40 - 44 35 - 39 30 - 34 25 - 29 20 - 24 15 - 19 10 - 14 5-9 0-4

5000 4000 3000 2000 1000 0
1,000
2,000
3,000
4,000
5,000
General Economy: Population Source: U.S. Central Bureau, International Database

This workforce will further fuel the GDP Per Capita in the coming years
Labor force (000 individuals)

60,000
GDP Per Capita (in USD)

1,200 1,074 1,024 835 725
50,000 40,000 30,000

552
20,000 10,000 0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
402
440
2000
2002
2004
2006
2007
2008
2009
Expected 2010
Labor force ('000 individuals)
Source: Governments General Office of Statistics (www.gso.gov.vn)

Consumer Confidence Index

Vietnam shows sharp consumer confidence re-gains and is ranked #2 top confident country in Q2.2010
2H 2010 Nielsen Consumer Confidence Index Vietnam - 2nd most confident
160
Changes 2H10 vs.1H10

2 3 18 2 -2 5 1 -3 -1 5 2 2 -2 1 0 5 1 4 3 5 2 2 -3 5 4 3 2 3 2 -2 -1 -1 7 2 -2 -17 -1 3 -4 -10 1 4 -5 -1 6 0 1 6
140
129 119 119 120 113113 109 107 112 108 102 101 105 101 99 98 98 98 97 97 97 94 93 92 92 100 80
Global average
88 88 88 87 87 85 84 84 81 79 78 78 73 73 71 69 68
93
65 63 61 59 56 55 52
60
40
20
AU BR CO
IN ID VN PH NO
EE LV KO
CA HK
ZA PL RU
GB EG
SG CN
BE TW DE UA
IT ES IE HU
PK AR TH MX
AE MY NZ DK
IL SE NL CH
Base : All respondents n=26995

JP LT
CZ TR
FI US AT
FR
Business Barometer

Vietnams Business Leaders show high growth expectations towards the total economy and their own business conditions
What do you think GDP growth rate will be for the next 12 months? What do you think your industry growth rate will be for the next 12 months?
14
What do you think your company growth rate will be for the next 12 months?
100%
13.6
21
2009 1st half

12
2009
2nd
half
11.3
80%
31
25%+
2010 1st half

10
10.2
60%
17 11
21% - 25%
16% - 20%
20 23
8
%
5.7 5.0 4.9
40%
11% - 15%
17
4
20%
12
6% - 10%
17 4
14 5
Less than 5%
0%
Est. Next 12 months GDP growth rate
All industry est growth rate
2009 2nd half
2010 1st half
9
Source: Nielsen Business Barometer

Tracked vs. 1 year ago, the workforce numbers are expected to increase to a good degree; which has a knock-on effect upon the manufacturers current concern of skilled labor shortage.
Over the next 6 to 12 months, how do you anticipate your company's work force numbers to change?
100%
4
11 Increase significantly (5)
80%
31 Increase somewhat (4)
60%
46 Remain the same (3)
40%
53
Reduce somewhat (2)
20%
30 11
Reduce significantly (1)
0%
1
2009 1st Half
2
2010 1st Half
10

Personal Finance Monitor
11

Research Design
Primary source Research Design N=600 per month HCMC / Hanoi Respondent Criteria Male & female 18-50 HIB: ABCD Decision makers Methodology Random sampling F2F interviews
Secondary sources
General Statistics Office
Nielsen Database (2006, 2008, 2009)
Nielsen Regional Differences Qualitative & Quantitative Studies June 2009
12

Despite all of the rapid changes and the positive indicators Vietnam is currently a very crowded financial market place with approaching 100 financial service suppliers operating.
13

Highlights
14

Highlights Customers
Half of the target remain unbanked and amongst those around 50% are either selfemployed or have involvement in a business
Who to target?
Triggers to attract new customers?
Future Intentions
Target Market is around 4 million customers. 50% of which are currently using banking services
Debit & Credit cards see high levels of future usage intention. Savings are still largely untapped.
Keep your customers satisfied

Customer service expectations are rising coupled with an increase in multiple account holdings
(Source: Nielsen database 2009)
Internet
A young urban population with high internet penetration but still almost no engagement with internet banking. Why?
(*): target population from 18-50 years old in class ABCD residing in Hanoi and HCMC.
Banking Services Awareness and Usage - Total

Awareness and usage are limited to some traditional banking services. More education of advanced products needs to be implemented.
Aware
Transactional account
100 100 99 99 87 79 54 40 36 23 16
Currently using
36 36 16 4 3 5 1 1 1 0 0 5 5 6 5 7 5 2 0 0 0 0
Lapsed
Approaching 50% of our sample have a bank account
ATM/ debit card Deposit/ saving account at bank Loan services provided by banks Foreign exchange service Domestic money transfer/payment
9% of them have both transactional and time deposit account

Base: All Respondents (n=1800)
International money transfer/ Expatriates' inward remittance Credit card transaction account (without card) Custody service Other banking services
Q9a - Which of the following FINANCIAL SERVICES are you aware of? [MA] Q9b - Which of the following FINANCIAL SERVICES did you ever use? (but stopped) [MA] Q9c - Which of the following FINANCIAL SERVICES are you currently using? [MA]
16

Overall satisfaction towards main banks

There are some improvement areas in order to enhance customer satisfaction. These include more convenient opening hours, appealing promotions and superior services for VIP customers.
TOP 2 BOX Strongly agree & Agree
Staff's customer service (friendly, responsive) Convenient opening hours Quick and simple transactions and procedures Staff's knowledge and ability to consult Range of services/ products Convenient transaction methods Low service fee and competitive interest rate Network of branches/ATM Appealing promotion program Facility at the transaction point
0 20 40
By region
B>A A>B B>A B>A B>A B>A A>B B>A
By age
B>A
60 80 100 0 20 40 60 80 100 120
Superior services for VIP customers Base: Bank users
B>A
Total (n=891) HN (B) (n=478)
HCM (A) (n=413)
Under 35 yo (A) (n=530) Over 35 yo (B) (n=361)
Q17 Using the following scale, please describe how satisfied you are with your main bank in each aspect. [SA]
17

Number of Banks Used

At this stage many customers still only use a single bank but this is changing. Whilst switching is rare, secondary accounts are increasing.
Total (n=596)
1 Bank 81
U35 (n=344)
84
O35 (n=252)
77
Class AB (n=262)
73
Class CD (n=334)
87
2 Banks
17
13
22
23
12
3 Banks
4 Banks
Mean score 1.22
1.20
1.25
1.33
1.14 18

Reasons for switching main banks

1st
Inconvenience 45%
No branch close to my house (30%) Not enough ATMs (8%)
2nd
Poor customer service 14%
Not convenient to use only Staff are not enthusiastic (14%) one bank (5%) Staff are not happy (9%) No demand (5%)
3rd
Procedures - 9%
Complicated procedures (9%)
4th
Others 23%
ATM card is expired (9%)
19
Q15 - Could you please let me know reasons why you stop using the service of your first bank?

Debit & Credit Cards
20
Personal Finance Monitor 2010 Page 20

Highlights Cards
Ownership
What could attract more customers?
Reason for not using
ATM/Debit Card 23% (~0.9 mil people)
Future Intention
No demand Knowledge Inconvenience Debit Card 24% Credit Card 7% Credit Card 1% (~0.04 mil people)
Broader coverage of ATMs 71% ATMs placed in Convenient and safe place 62% Safety of the card 52% Issued by a trustworthy bank 35%
21

Card type awareness

Awareness of both Debit and Credit cards has increased significantly over the past 5 years among the banks customers.
Total
2006 (n=1000)
ATM
HCM
2008 (n=1000)
98
HN
2008 (n=500)
99
Q2 - 2010 (n=891)*
100
2006 (n=500)
91
Q2 - 2010 (n=413)*
100
2006 (n=500)
92
2008 (n=500)
97
Q2 - 2010 (n=478)*
100
91
Credit card
21
23
54
19
22
62
24
25
32
Debit card
15
43
15
46
14
13
35
Multi-functional card 0
33
37
23
Student associated card 0
13
15
Associated card 0
10
13
Integrated card 0
10
10
None of the above
* Base: Not Code 12 in Q9c
Q36a Which kind of cards are you aware of?
Reasons for no use Credit Cards

The same is primarily true for Credit Cards but with inconvenience being given more importance.
1st
No demand 59%
2nd Knowledge 31%
3rd
Key responses : No demand (majority) Already have ATM card Do not prefer use credit Key responses : Do not know how to apply for Do not know much about this service Do not know much about the credit function
Inconvenience 13%
Key responses: -I am not qualified to open a account -Complicated procedures -Not many places accept card payment Page 23 Q38R2: Could you please let me know the reason why you do not use/own any credit card?
Lending
24
Personal Finance Monitor 2010 Page 24

Highlights Lending
Ownership Bank loan 2% (~0.08 mil people) Non-bank loan 6% (~0.2 mil people)
Sources for non-bank lending
Triggers for usage Interest rate (67%) Simple procedure (66%) Offer unsecured loan (38%)
From family: 66% From friends: 54% Own savings: 34%
Future Intention At bank: 11% Non-bank: 14%
25

Savings & Investments
26

Highlights Savings & Investments

Why I choose it as my main bank? Savings Saving at non-bank sources 53% (~ 2.1 mil people) . Saving at bank 10% (~0.4 mil people)
Competitive interest rate 60% Prestigious bank 56% Highly recommended by others 52% Good customer service 50% Main Banks
Top 3 current Investment methods Put money into my own business 61% Gold trading 35% Real estate 23%
ACB 21% Vietcombank 14% Agribank 14% Sacombank 11% Vietinbank 11%
27

Non-banking Savings
85% of the target customers have savings that are not held in a bank. This suggests a lack of understanding of the benefits of using banks for these services.
Aware
Life insurance
Currently using
7
Lapsed
3
100
Saving (not at banks)
99
85
Loans (from other sources apart from banks)
95
23
Investment (into real estate, securities, etc.)
91
Base: All Respondents (n=1800)
Q9a - Which of the following FINANCIAL SERVICES are you aware of? [MA] Q9b - Which of the following FINANCIAL SERVICES did you ever use? (but stopped) [MA] Q9c - Which of the following FINANCIAL SERVICES are you currently using? [MA]
28

Insurance
29

Highlights Insurance
Top 3 current Insurance Company Prudential 54% AIA-AIG 25% (focus in HCMC) Bao Viet 13% (focused in Hanoi) Top Perception Protection 74% A form a savings 68% Buying security 59%
Current use and most important products Life insurance Educational Accident
Reason for Non-Owner Ship Do not believe 48% Have no knowledge 43% Customer Service 41%
30

Non-bank users
31

Barriers to banking?
Barriers are largely around a perceived lack of value or convenience. Coupled with this is a reluctance to submit personal financial information.
Lengthy application procedures 63% Valued pledged assets required 49% Simple application procedures 58%
Affordable interest rate 63%
Key Barriers to Banking (n=909)

Financial evidence required 48% High interest rates 38%
Potential Triggers (n=909)

Prestigious banks 39% No financial/ income evidence required 38%
Base: those who are not using banking services Q60 Could you please let me know reasons why you do not use banking services? Q61 Could you please let me know some factors that can help encourage you to use banking?
32

Non-Bank - Saving
These potential customers are seemingly happy to continue to save money at home. How much money is out there?
Total (n=850) HCM(A) (n=470) HN(B) (n=380)
Top ranked
Top ranked
Top ranked
97
98
94
97 22
I buy gold and save at home.
98 B 24 B
94 13
2
I buy foreign currency and save at home. I save money at home
2
I buy insurance for myself and my relatives in case unexpected problems happen.
2
2
2
1
Base: those who are not using banking services and save at home
33
Q62 Could you please rank those investment (which are the most 3 preferred investment)?

Self-employed & Business owners

Bank usage amongst this group is far lower than the total target customers base despite their meeting the same target criteria.
Total target audience
Total (n=1800) Users (A) (n=891)
77 75 2 34 8 5 10 3 6 6 85 9 B 74 4
Total self-employed people

Total (n=663)
20 19 0 14 4 2 4 1 9 11 1 41 11 5 12 4 9 7 88 8 9 76 7
Non-users (B) (n=909)

0 0 0 0 0 0 0 0 6 12 A 95
Users (A) (n=240)

58 56
Non-users (B) (n=423)

0 0 0 0 0 0 0 0 9 13 95
Bank services
Transactional account ATM/ debit card Credit card 1
36 36
Time deposit saving account 16 Loan services provided by banks 4 Foreign exchange service 3 Domestic money transfer/payment 5 International money transfer/ Expatriates' inward remittance 1
Non-bank services
Investment 6
Loans (from non-bank sources) 9 Saving (not at banks) Life insurance 7 Base: Self employed people (n=663)
Banking Channels
35

Transaction channels Total

Branch usage remains high to meet the largely simple needs of most customers. Trust and confidence issues overcome any inconvenience. ATM usage for simple transactions has soared rapidly as customers become aware of the benefits, boding well for new channels.
Channels
Bank counter
83
4 36
Frequency
42 16
Mean score
0.18 times/ week
ATM machine
77
50
37
0.50 times/ week
Everyday Once a week Once a month Less than once every 3 months
Every other day 2-3 times a month Once every 2-3 months
Base: All respondents Q26a - In past 6 months, which channels have you ever contacted/done transaction deposit/withdrawal/transfer/payment? [MA] Q26b - How frequently do you make a transaction by each method? [SA]
36

Internet usage in Vietnam is higher than many of its SE Asian neighbours and is growing significantly.
63
Internet Access (% of population)

50 40 30 22 20 10 0
India Philippines China Vietnam Malaysia
24
15 7
Source: Nielsen Omnibus Aug 2008 - Generation V Study Nielsen Vietnam Mobile Insights Mar 2009
37

In urban areas and amongst the under 30s internet usage is extremely high. Around 50% of them access the internet at least once per day.
Internet Access (% of population)
80 73 70 63 60 50 40 30 22 20 10 0
India Philippines China Vietnam Malaysia HCM & Hanoi 18-30 31-40 41-50
45
24
21
15 7 7
Source: Nielsen Omnibus August 2008
38
Q38: Use of Internet in the past 12 months

And yet despite this behaviour, Internet banking is still only used by around 1% of customers.
Call operator n=890

Awareness (54%) - Lack of awareness about this channel (37%) - Dont know how to use this channel (9%) Safety (32%) - I dont feel secured (27%) Inconvenience (11%) No demand (5%) Others (6%)
SMS banking n=891

Awareness (52%) - Lack of awareness about this channel (36%) - Dont know how to use this channel (11%) Safety (32%) - I dont feel secured (25%) Inconvenience (11%) No demand (5%) Others (4%)
Internet banking n=889

Awareness (52%) - Lack of awareness about this channel (32%) - Dont know how to use this channel (15%) Safety (28%) - I dont feel secured (21%) - Lack of trust (5%) Others (13%) - I dont know much about the internet (6%)
Bank counter n=181

No demand (82%) Inconvenience (18%) - Time consuming (10%)
ATM machine n=185

No demand (80%) - I dont use ATM card (46%) - I have no demand (34%) Safety (13%) - I dont feel secured (7%) - Afraid of losing money (5%) Inconvenience (10%) - Not convenient to do transaction (6%)
Base: All Respondents
Q28 - Could you please let me know the reason why you do not conduct transactions by_________ Page 39 Personal Finance Monitor 2010 (READ OUT EACH CHANNEL THAT IS NOT CHOSEN IN Q27 FOR TRANSACTION TYPES)?
If you know who they are, where they spend their time and how often they go there, can you develop education and trust?
HCMC (n=309) Hanoi (n=427) Under 35 (n=584) Over 35 (n=152)
vnexpress.net 64%
dantri.com.vn 73%
vnexpress.net 60%
vnexpress.net 62%
24h.com.vn 49%
24h.com.vn 63%
24h.com.vn 57%
tuoitre.com.vn 44%
tuoitre.com.vn 48%
vnexpress.net 50%
dantri.com.vn 38%
24h.com.vn 41%
Base: Those who choose code 4 in Q71a Q76 What are the most 3 popular websites that you have visited during past 7 days? [MA]
40

Summary Vietnam is heating up!

Education one should not underestimate the lack of understanding that exists around banking products amongst many customers. Communication and education will be an essential part of building relationships with those groups currently untapped.
Youth Vietnam has a large, young population and the signs, across all sectors, are that they are increasingly exposed to new products and services and they are increasingly open to investigating them.
Operations & Channels the best brand promise in the world must be backed up by operational delivery. Be bold with your channel delivery. Almost 50% of business leaders in Vietnam said that the internet will see an increase in spend as a communications channel this year.
41

Questions?
42


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Personal Finance

Mid Year - 2010

Personal Finance Monitor 2010

Vietnam is Heating Up!

Personal Finance Monitor 2010

Ho Chi Minh Hanoi Haiphong Danang Nhatrang Cantho

Cantho Ho Chi Minh

Personal Finance Monitor 2010

80+ 75 - 79 70 - 74 65 - 69 60 - 64 55 - 59 50 - 54 45 - 49 40 - 44 35 - 39 30 - 34 25 - 29 20 - 24 15 - 19 10 - 14 5-9 0-4

General Economy: Population Source: U.S. Central Bureau, International Database

Personal Finance Monitor 2010

Labor force (000 individuals)

GDP Per Capita (in USD)

50,000 40,000 30,000

Labor force ('000 individuals)

Source: Governments General Office of Statistics (www.gso.gov.vn)

Personal Finance Monitor 2010

Consumer Confidence Index

Personal Finance Monitor 2010

Changes 2H10 vs.1H10

Base : All respondents n=26995

Personal Finance Monitor 2010

Personal Finance Monitor 2010

2009 1st half

2010 1st half

5.7 5.0 4.9

Est. Next 12 months GDP growth rate

All industry est growth rate

2009 2nd half

2010 1st half

Personal Finance Monitor 2010

31 Increase somewhat (4)

46 Remain the same (3)

Reduce somewhat (2)

Reduce significantly (1)

Personal Finance Monitor 2010

Personal Finance Monitor

Personal Finance Monitor 2010

General Statistics Office

Nielsen Database (2006, 2008, 2009)

Nielsen Regional Differences Qualitative & Quantitative Studies June 2009

Personal Finance Monitor 2010

Personal Finance Monitor 2010

Personal Finance Monitor 2010

Triggers to attract new customers?

Keep your customers satisfied

Banking Services Awareness and Usage - Total

Approaching 50% of our sample have a bank account

9% of them have both transactional and time deposit account

Personal Finance Monitor 2010

Overall satisfaction towards main banks

Superior services for VIP customers Base: Bank users

Total (n=891) HN (B) (n=478)

HCM (A) (n=413)

Under 35 yo (A) (n=530) Over 35 yo (B) (n=361)

Personal Finance Monitor 2010

Number of Banks Used

Mean score 1.22

Personal Finance Monitor 2010

Reasons for switching main banks

No branch close to my house (30%) Not enough ATMs (8%)

Poor customer service 14%