Four years ago, joint stock banks’ market share was barely equal to ½ of that held by state owned banks; now joint stock banks have taken charge over the last four years with a stable growth rate of 60-120% per annum, while State-owned banks have plodded along at under 20% per annum.

Joint stock banks’ ownership capital up

There are 18 joint stock banks which set up their head offices and hundreds of branches all over HCM City.

The total Stockholders’ Equity (Total assets minus total liabilities) of the 18 had reached VND24.4tril ($1.53bil) by December 2007, increasing 43.1% over the end of 2006.

Sacombank is leading in terms of chartered capital with VND4.5tril ($277.81mil), followed by Eximbank with VND2.8tril ($175mil) and ACB VND2.5tril ($158.12mil). Meanwhile, Eximbank maintains the highest Stockholders’ Equity, at VND12.7tril ($793.75mil).

Leading in capital mobilization

It is estimated by the end of December 2007, joint stock banks in HCM City had successfully mobilized VND204.4tril ($12.8bil), accounting for 46.9% of total capital mobilized by local banks. State-owned banks, which held over 50% of the market share four years ago, have kept only 35.09%, while foreign bank branches which held 12-13% four years ago, now have 15.85%. Joint venture banks are holding 2.48% of market share and the remaining is held by finance companies and credit funds.

Joint stock bank’s loans up, state owned banks’ loans down

By the end of December 2007, total outstanding loans of joint stock banks in HCM City reached VND159.4tril ($10bil), accounting for 45.93% of total lending market share in HCM City while State-owned banks accounted for only 29.39%.

Foreign banks’ market share has also been expanded from 12-14% to 19.02%. Joint venture banks now hold 2.9% of the market share. Several joint stock banks, which shifted from rural to urban banks in 2007, saw impressive growth rates of 400-800% this year over last.

Network expanding rapidly

By December 2007, banks in HCM City had 917 branches and transaction points, while joint stock banks had 515 branches and transaction points. State-owned banks had 331 branches and transaction points. Meanwhile, several State-owned banks have not been able to fund new branches and transaction points.

Benefits of privatization

The total pre-tax profit of HCM City’s banks by the end of September 2007 reached VND9tril ($563.31mil), 142.6% over 2006. Of this amount, State-owned banks account for 34.2% only, joint stock banks 48.1%, foreign banks 14.2% and joint venture banks 3.5%.

Experts say that while joint stock banks have been focusing on upgrading technology and management skills, improving staff quality, expanding networks and generating new products over the last four years, State-owned banks have been largely focused on equitisation, bad debt settlement and network restructuring. Joint stock banks can attract qualified staff, while State-owned banks, which cannot offer salaries higher than stipulated by the State Bank, find it hard to employ good managers. All these factors explain why State-owned banks have lost their footing and are playing catch-up, despite having dominated the market in years past.

Source: VietnamNet.