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  • 18 January 2018

    finance & business news

    FINANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Reference exchange rate up 15 VND 1 Real estate credit up nearly 9pct from December 31, 2017 2 Which banks will have difficulty in raising capital to meet Basel II? 2 Why do banks' profits increase unexpectedly? 3 Many banks cautiously set profit plan for 2018 3 Will P2P lending compete directly with banks and finance

    companies? 5 EIB loans to help ease ODA departure 6 TPBank receives PCI DSS 3.2 certification 7 ACB's profit in 2017 estimated to swell 59pct y-o-y 8 VIB posts strong profit growth in 2017 8 Sacombank to sell over 81 million treasury shares 9 Japanese insurer records strong growth in Vietnam 9 CPTPP Serving Vietnam as Opportunities and Challenges 10 Standard Chartered forecasts 6.8pct GDP growth for Vietnam 12 Experts skeptical about high economic growth in 2017 12 Capital Economics: Growth to slow from 10-year high 13 VN effectively uses ODA from Korea: KOICA 14 Vietnam runs $5.9 billion trade deficit with SEA region 14 Auspicious start to Vietnamese rice export in 2018 15 Japanese auto makers halt exports to Vietnam in wake

    of tightened quality checks 15 Go slowly on VAT 16 Govt should offer more tax incentives for auto parts 18 Environment tax hike on fuels postponed 19 With Chinese competition, new glass licences on hold 19 Binh Duong plans to lure $1.4 billion FDI capital in 2018 20 Investment in startups expanded 21 'Shop and Store' a new kind of event 21 Experts decry Vietnam's risky coal compulsions 22 Plastics growth garners strong interest 24 Real estate still facing unresolved legal issues in 2018 25 Co-living and green: the latest trends to sweep Vietnam's

    real estate market 26

    Local brands outperform multinational rivalsreports 27 80pct of shops report revenue growth in 2017 28 More firms register investment in renewable energy in Bac Lieu 28 Ha Nam pledges favourable conditions for foreign investors 29 Infrastructure ups Thu Thiem's appeal 29 G20 billions feed coal-fired future 31 Kagoshima prefecture's firms wish to invest in Vietnam 32 More UK businesses expected to invest in Vietnam 32

    BIZ NEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Business Briefs 18 January, 2018 33 UPCoM the only index in positive territory 34 VN Index surge is cause for concern 35 'Golden real-estate land' running out in HCM City 36 Vietnamese using more premium products as incomes rise 37 Vietnam caps promotions for prepaid mobile subscribers 37 Vietnam Customs proposes building bridge to China to

    facilitate border trade 38 Vietnam helps Cambodia increase cashew output 38 Vietnam sees sharp rise in cruise ship visits 39 HCM City suspends several BOT projects 39 Con Dao airport to be upgraded for bigger aircraft 40 Defense ministry approves VietBamboo Airlines project 40 Direct flight launched between China and Hanoi 41 Doosan Vina urged to expand operation in Vietnam 41 Long An power centre hits delays 42 Billionaire Thao's company replaces Posco E&C in Splendora 42 Jollibee celebrates 100th store in Vietnam 43 Pegasus Vietnam to carry out Outward Bound Vietnam

    with BIDV aid 43 US firm eyes Vietnam's petrochemical industry 44 Vietnam's top taxi firm fears bankrupcy in the era of Grab, Uber 45


    FINANCE Reference exchange rate up 15 VND


    The State Bank of Vietnam raised the daily reference VND/USD exchange rate by 15 VND to 22,406 VND/USD on January 18. With the current trading band of +/- 3 percent, the ceiling rate applied to commercial banks during the day is 23,075 VND/USD and the floor rate 21,739 VND/USD. The opening hour rates at commercial banks stayed rather stable, with Vietcombank and Vietinbank maintaining the same rates as on January 17. The greenback is bought at 22,675 VND/USD at the two banks, and sold at 22,745 VND/USD. Meanwhile, BIDV cut both rates by 5 VND, listing the buying rate at 22,675 VND/USD and selling rate at 22,745 VND/USD. https://en.vietnamplus.vn/reference-exchange-rate-up-15-vnd/125076.vnp

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    Vietnam finance & business 18 January 2018

    Real estate credit up nearly 9pct from December 31, 2017


    According to the State Bank of Vietnam (SBV), the total credit limit for BOT, BT projects in transportation sectors was nearly 169 trillion dong as of September 30, 2017 compared to the outstanding credit of nearly 91 trillion dong, up nearly four percent from the end of 2016, accounting for about 1.5 percent of oustanding credit to the econ- omy. Credit to real estate sector as of November 30, 2017 was 416 trillion dong, up nearly nine percent from December 31, 2016, making up approximately seven percent of the oustanding credit to the economy. The outstanding loans for housing demand as of November 30, 2017 was more than 552 trillion dong, up more than 24 percent from January 2017, representing about nine percent of the general oustanding credit.

    Which banks will have difficulty in raising capital to meet Basel II?


    The Capital Adequacy Ratio (CAR) of joint stock commercial banks participating in the pilot of Basel II including ACB, VPB, MBB, TCB, VIB and MSB is always very high. Therefore, these banks may not face many obstacles with the aforementioned road- map. On the contrary, some banks will encounter this problem. That statement was given in the recently updated report about the banking sector by Viet Dragon Securities Company (VDSC). Accordingly, the Basel II will be implement- ed from 2019 for 10 pilot banks and 2020 for the remaining ones. Since the end of 2016, the State Bank issued Circular No.41 on CAR for banks, foreign bank branches. Accordingly, 10 banks participating in the Basel II pilot must officially apply CAR in accordance with Circular No.41 and by 2020; all the remaining ones will have to apply CAR following this Circular. The CAR at the end of Q2/2017 slightly decreased compared to the end of 2016 due to strong credit growth. The CAR varies widely between state-owned banks and non- state joint stock commercial banks. Accordingly, CAR of joint stock commercial banks participating in the Basel II pilot including ACB, VPB, MBB, TCB, VIB and MSB has al- ways been very high. Therefore, these banks may not face many obstacles with the aforementioned roadmap. On the contrary, CAR of VCB is approximately 10 percent and that of BID and CTG is less than 10 percent. As such, state-owned banks will have to race to increase capital to be able to meet the aforementioned roadmap. As a result, the growth potential as well as the risk of dilution in the next 2-3 years will be relatively large in state-owned banks. VCB with good asset quality and carefully managed lending portfolio, high risk pro- visioning is supposed not to have too large dilution pressure after raising capital. According to VDSC, after having the information that BID signed memorandum of un- derstanding with Hana Bank (South Korea), the market expects that this bank will be BID's strategic partner in the near future. If this deal is successful, on the one hand, it will lead to dilution pressure. On the other hand, it will bring about many positive im- pacts to the bank such as the significant improvement in Tier 1 capital, the support in terms of management and technology from strategic partner. Among three listing state-owned banks, CTG is unlikely to raise capital because the state ownership rate at CTG has reduced to the minimum prescribed level (about 65 percent). The additional issuance to existing shareholders is also infeasible when the State plans not to invest more in the banking sector. The current measure for raising CTG's equity is to make dividend payment by shares, and this method was mentioned by the government in the regular meeting at the beginning of 2017 and is expected to be realised and issue non-voting shares in order to ensure the dominating right of the state bank. Beside the separate issuance and dividend payment by shares, VDSC realised that banks are also restructuring their investment portfolio to increase equity because in- vestment in other credit organisations and insurers are items that must be excluded from the calculation of Tier 1 equity. Typically was VCB's capital divestment from

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    Vietnam finance & business 18 January 2018

    credit organisations and other consumer finance companies or CTG's capital divest- ment from Aviva insurance. For VCB, it is estimated that the bank's Tier 1 capital may increase to more than 12 percent after divesting from other credit organisations.

    Why do banks' profits increase unexpectedly?


    At this point, some commercial banks have announced business results in 2017 with significantly improved profits. While the group of state-owned commercial banks have reported profits surpassing the plan, profits of the group of joint stock banks also surged. So far, all the four state-owned commercial banks have announced 2017 business re- sults. Vietcombank officially led the system with the pre-tax profit of 11.018 trillion dong after having put sufficient provision. Vietinbank's pre-tax profit also touched more than 9.2 trillion dong. BIDV also surpassed itself compared to the previous year with the additional profit of more than