FINANCE. finance & business news. Reference exchange rate goes up 5 VND

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1 finance & business news 30 March Reference exchange rate goes up 5 VND 1 M&A in banking unlikely to pick up soon 2 Govt mobilises $184 million through G-bond auctions 2 Competitive pressure makes consumer loan rates to decrease 3 USD interest rate hike may increase VND interest rates 4 Banks' interest rate race heralds danger 5 Many changes seen in joint stock banks after 5 years of restructuring 6 Financial companies not yet the rivals of banks 8 BIDV named best retail bank for third straight year 9 LienVietPostBank plans to list on UPCoM 9 HSBC launches e-customs payments 9 Vietcombank the only bank in Top 10 Best Places to Work Vietnam's growth slows down to 5.1pct in Q1 11 CPI goes up 4.96pct year-on-year in first quarter 12 Export growth beyond expectations in first quarter 13 Vietnam faces return of trade deficit 13 Agro, forestry, fishery export value up by 7.6pct 13 Pangasius price hits peak in Mekong Delta 14 Rice exporters suffer losses due to sudden domestic price hike 14 Vietnam, China account for 45pct of ROK aluminium exports 15 Vietnam, India trade on upward trend 16 HCM City sees high investment from overseas Vietnamese 16 Hai Phong draws $208 million in Q1 FDI 17 Binh Duong records $1.7 billion trade surplus in Q1 17 Emission policy frustrates automakers 18 Retail power market eyes competitive future 19 Seminar seeks solutions to boost Vietnam's trade facilitation capacity 20 Concerns emerge over farmland limit rise 21 VND400 billion for hospital upgrade 22 EU-bound tra fish export poised to decline further 22 Ca Mau suitable for organic shrimp farming 23 HCM City seeks to bolster startup ecosystem 23 City starts safe supply chains 24 HCM City may tax online sales next month 24 SCIC works to improve corporate governance 25 $45mn debris detection system proposed for Reference exchange rate goes up 5 VND Vietnam's major airports 26 Thanh Hoa targets sustainable offshore fishing development 26 Thanh Hoa develops animal husbandry 27 Quang Ninh proposes upgrade to Quang Ninh Airport 27 Highlands need macadamia study 28 China in strong demand for Vietnamese pomelos 29 Emerging market status key to netting foreign investment 29 Realty market sees more mergers and acquisitions 30 Suspicions around Vinaland's Saigon South Plaza 30 Vietnam's agro exporters to raise quality for Japanese market 32 VN eyes organic food potential 33 BIZ NEWS Business Briefs March 30, VN Index retreats from 10-year high 35 Main indexes in positive territory 36 VN Index trades lower as blue chips slide 36 Shares rebound as bargains sought 37 Profit taking surges 37 Petrolimex to list on HCM City stock exchange 38 TPG buys majority stake in Vietnam Australia International School 38 GTNFoods outlays $79.2mn for Vilico and Vinatea 39 Vietnam, Japan ink MoU to boost tourism 40 Vietnam receives great attention from RoK investors 41 Major biotech conference gets underway in Hanoi 41 HCM City hosts maritime industry, refrigeration technology expos 42 Success at marine expo in HCM City 42 CJ Group looks to step up presence in Vietnam 43 Ba Na Hills hotel woos tourists with promotions 43 Luxury housing in downtown Hanoi attracts attention 44 3 telecom giants fined for fake subscriptions 44 Vingroup sees rise in earnings for Vinalines to sell its shipyard company 45 Vietnam Airlines opens Hanoi-Sydney air route 45 Hotel Nikko Hai Phong signs management deal 46 Vietnamese people help build telecommunication service in Africa 46 Vinh Phuc province's youth urged to open startups 47 30/MAR/2017 INTELLASIA VNA The daily reference exchange rate for VND/USD was set at 22,265 VND/USD on March 30, up 5 VND from the previous day. With the current +/- 3 percent trading band, the ceiling rate for commercial banks during the day is 22,932 VND per USD and the floor rate 21,598 VND per USD. Meanwhile, the opening hour rates listed by commercial banks continued to reduce slightly. Vietcombank revised both its buying and selling rates down 10 VND from a day ago to Intellasia No. 21, lane 173/63/17, Ngoc Ha Ward, Ba Dinh Dist, Hanoi All Rights Reserved Tel: Fax: Websites:

2 M&A in banking unlikely to pick up soon 22,720 VND and 22,790 VND per USD, respectively. BIDV set its buying and selling rates at 22,720 VND and 22,790 VND per USD, both down 15 VND. Vietinbank listed the buying rate at 22,705 VND/USD and the selling rate at 22,785 VND/USD, both down 15 VND. 30/MAR/2017 INTELLASIA VIR Mergers and acquisitions (M&A) activities in the banking sector in the past two years seem to have cooled down, and without the right policies that would solve major bottlenecks in the process of buying banks, it is unlikely to pick up soon. According to Le Minh Hung, governor of the State Bank of Vietnam (SBV), the government has recently made a few steps aiming to accelerate the restructuring of the banking system and dealing with bad debts, but there are many prevailing issues. The deadline for application of Basel II is coming soon, putting pressure on small banks, especially those that have not been able to raise capital in the past few years. such as Saigonbank. and banks that have a capital verging on the required minimum of VND3 trillion ($132 million). Experts in the field said that in order to survive, small banks have only one solution, which is M&A. Bach An Vien, head of research at KIS Securities, said that currently bad debts are being resolved and banks' operations are stabilising, with most failing banks having been sold at VND0 to the SBV. Therefore, there are not many M&A on the horizon in the banking sector. Le Anh Tuan, head of research at Dragon Capital, said that M&A in banking in the next period will not be as exciting as it used to be because domestic investors do not have enough money to buy banks, while it is difficult to attract foreign investors to buy banks due to the foreign ownership limit. Moreover, the bad debt issue persists. Vincent Conti, economist of S&P Asia, said at HSBC's March 23 conference on Vietnam's economic outlook for 2017 that lending is very high. The country has a history of high inflation and instability. government debt is also high and increasing. He prescribed that Vietnam should push the resolution of bad debts. Meanwhile, Vietnam Asset Management Company is like a warehouse holding bad debts without doing anything to resolve them. It only took the bad debts off banks' balance sheets for five years at most. Pham Hong Hai, CEO of HSBC Vietnam, said Vietnam does not use the state budget to resolve bad debts, so banks still have to allocate finances for this themselves. Economist Can Van Luc earlier said that one of the key ways to resolve bad debts is to have a legal framework to establish a debt market. Govt mobilises $184 million through G- bond auctions 30/MAR/2017 INTELLASIA VNS The Bank for Social Policies has mobilised VND4.2 trillion (US$184 million), so far, this year by auctioning government-guaranteed bonds at the Hanoi Stock Exchange (HNX). The latest auction was held on Tuesday, bringing the bank VND980 billion, which included VND300 billion in five-year bonds, VND400 billion in 10-year bonds and another VND280 billion in 15-year bonds. The bidding for the five-year bonds fetched VND300 billion at a winning coupon rate of 5.4 per cent per annum, up 0.1 per cent from last week's session. The bidding attracted two HNX members with valid bidding volume of VND400 billion and annual coupon rate ranging from 5.3 per cent to 5.5 per cent. Two members participated in the bidding session for the 10-year bonds with valid bidding volume of VND650 billion at 6.45 to 6.5 per cent per annum. The bonds earned VND400 billion at a winning coupon rate of 6.47 per cent per annum, down 0.01 per cent from last week's session. Meanwhile, VND280 billion worth of 15-year bonds were mobilised at a winning cou- Intellasia 30 March / 47

3 Competitive pressure makes consumer loan rates to decrease pon rate of 7.35 per cent per annum. The bidding session attracted two participants with valid bidding volume totalling VND380 billion and annual coupon rate ranging from 7.3 per cent to 7.35 per cent. million-through-g-bondauctions_ html 30/MAR/2017 INTELLASIA VIETNAM Over the past two years, the consumer lending market has been buoyed by the strong involvement of financial companies. Understanding the increasingly rapid trend of consumer lending, many financial companies have continuously been formed in many forms, from acquisition, merger to new establishment The consumer lending market is now recording the strong performance of some credit organisations accounting for the majority of market share such as FE Credit, HomeCredit or HD Saison. In addition, many other companies have been established but have not yet been put into operation or are operating with more modest market share such as Vietnam Maritime Commercial Joint stock Bank Finance Company Limited or Vietnam Technical and Commercial Joint Stock Bank Finance Company Limited. Earlier, since the end of 2016, the State Bank of Vietnam (SBV) approved the merger of Vinaconex - Viettel Financial Joint Stock Company (VVF) into Saigon Hanoi Commercial Joint Stock Bank (SHB). On January 12, 2017, VVF officially ceased all activities in the financial market, and SHB was also licensed by SBV to set up SHB Consumer Finance Company Limited. Meanwhile, MBBank, after successfully restructuring Song Da Finance Joint Stock Company, also sold 49 percent stake to its Japanese partner and renamed it into MB Shinsei Finance Company which is expected to be put into operation this year. Even Vietinbank also wants to enter the consumer lending market with the intention of shifting part of PGBank into a PG Finance Company after merger. Article 108 of the Law on Credit Institutions 2010 stipulates that the capital mobilisation from financial companies must be limited within the targeted population. Accordingly, financial companies are not allowed to mobilise deposits from individuals but from economic organisations only. Therefore, the development of sustainable consumer financial markets, creating credibility and trust for customers will be a great opportunity for the favourable capital mobilisation, reducing related costs, promising to reduce consumer lending rates accordingly. In addition, more and more financial companies appear in the market and the increasingly large outstanding loan of financial companies has helped consumer lending rates to decrease considerably. Compared to a few months ago, the interest rates for consumer loans have reduced significantly, currently hovering around 30 percent per year only. However, as reflected by some people, they are subject to the interest rates amounting to 50 percent per annum. Representative of a financial company said that some loan agreements have higher interest rate than the popular interest rate because that agreement encounters barriers related to the credit history of the borrower for example that person did not pay on time when borrowing from previous credit institutions or the customer does not have enough evidence to confirm the sufficient income for repayment of the loan limit. Financial companies themselves when encountering such cases are also subject to a lot of risks. In fact, the percentage of customers who have to bear the 50 percent interest rate per annum accounts for only about five percent of the total number of loan contracts. A policy recently promoted by financial companies is to offer loans to purchase products at zero percent interest rate. This is considered as one of the competitive strategies of financial companies to attract customers. Quang Huan (Dong Da District) said in spite of not having enough money, when seeing the zero percent interest rate at the phone shop, he decided to sign a loan contract Intellasia 30 March / 47

4 to buy a Samsung phone for nearly 17 million dong. After calculating, by the maturity date, Huan only had to pay a small difference compared to the selling price, while his advance payment was zero dong. As per financial experts, the reason that the interest rate for consumer loans decreased as well as the popular appearance of zero percent interest rate packages is the market appears more and more credit units. The competitive pressure forced these financial companies to reduce input costs to offer competitive rates. Having shared about the reasons financial companies can offer zero percent interest rate, financial expert Nguyen Tri Hieu said financial companies are willing to offer zero percent interest rate for some products as they already have cooperation with the production units or the product distribution agents. Accordingly, these units are willing to coordinate with financial companies to share costs, promote stimulus programmes to encourage customers to buy products through consumer loans. This is considered a resonance relationship between manufacturers, financial companies and consumers. Manufacturers can sell goods, shorten the turnaround time, and people can buy products even if their financial capacity is not enough while financial companies have profits divided from manufacturers. As per Nguyen Thi Hien, deputy director of SBV's Institute of Strategy, the key factor affecting interest rates is competition. "When the market develops with many suppliers, competitive pressure will be an important driving force for more stable consumer lending rates", Hien said. USD interest rate hike may increase VND interest rates 30/MAR/2017 INTELLASIA NDH The US dollar mobilisation interest rate in Vietnam has been maintained for a long time at 0 percent. Meanwhile, the US is gradually implementing tightening monetary policy with an expected roadmap to increase interest rates to 1.5 percent in late 2017 and 2.25 percent in late This has raised concerns that foreign investors may withdraw capital from the country in the near future. However, at the online exchange on the movements of interest rates in 2017 held by Tri Thuc Tre online newspaper, experts said that although keeping US dollar mobilisation rate at 0 percent has certain disadvantages, it is not the cause of the withdrawal of capital by foreign investors. The Head of the Retail Research & Investment Advisory at Saigon Securities Incorporation (SSI) Nguyen Duc Hung Linh said that maintaining US dollar deposit rate at 0 percent to against dollarisation and increasing US dollar supply to stabilise exchange rate are the right policies in the recent time. However, Linh also stressed that any option has two sides. When the interest rates of the US Federal Reserve (Fed) remain low, the negative sides of the 0 percent interest rate are not shown much, but if the Fed rapidly widens the interest rate difference in the near future, the need to transfer money or store money in Vietnam will decline and it will be a reason for the reduction of remittances. However, Linh believed that the capital withdrawal of foreign investors and the maintenance of US dollar deposit rate at 0 percent have less direct connection. He added that foreign investors do not come to Vietnam to deposit US dollars, and they pay attention to interest rate issue because it is considered an indicator of exchange rate risk and foreign investors are more interested in observing interest rates dong rather than in US dollar. Linh said that the interest rate raise of the Fed and the risk of capital withdrawal are more related to the stock market when foreign investors change their asset allocation strategy. Accordingly, they withdraw capital from emerging markets and transfer to the US when the risks in emerging markets increase and the investment opportunities in the US become more abundant. According to SSI's expert, although the stock market of Vietnam is fairly fortunate as foreign investors are still net buyers of both stocks and bonds and the forecast of the Fed's further interest rate hike has not yet significantly affected the balance of cash flow withdrawn from Vietnam, we should not be subjective in the long term. Intellasia 30 March / 47

5 Sharing similar view with Linh, Dr Nguyen Duc Do - vice director of the Institute of Financial Economics also said that the main cause leading to the reduction of remittances to Vietnam in 2016 is actually the interest rate increase of the Fed rather than the 0 percent US dollar deposit rate in Vietnam, because if foreign investors borrow in US dollars in the US, when they are in Vietnam, they will lend in dong at seven percent per annum and will not lend in US dollars at 0.5 percent or one percent per annum. In Dr Do's point of view, the impact of keeping US dollar interest rate at 0 percent is insignificant. Although the US dollar deposit rate does not affect the foreign capital withdrawal from the economy, Dr Can Van Luc said that it is still advisable to consider increasing the ceiling interest rate for mobilising US dollars from the population. The reason is that this will make Vietnamese people feel less disadvantaged when depositing US dollars as the Fed's uptrend of US dollar basic interest rate has become fairly clear. Moreover, considering the effectiveness, if the US dollar ceiling deposit rate is not increased, Vietnamese banks have to borrow foreign loans at much higher interest rates of 1-3 percent per annum compared to the 0.25 percent per annum deposit rate if the increase is made. On the other hand, raising US dollar deposit rate will help enhance the transparency of the system because it will prevent banks from giving extra interest rate for US dollar depositors through difference promotional forms. Contrary to the US dollar deposit rate, the movements of US dollar borrowing rates have a relatively large connection with the dong borrowing rates. The US dollar borrowing rates are following an upward trend, reaching seven percent per annum at some banks. According to representative from SSI, the US dollar liquidity will face difficulties because Vietnam has recorded trade deficit and limited US dollar inflows in the recent months. Meanwhile, the demand for US dollar loans in the domestic has increased due to the needs for production inputs in the coming quarters which leads to the rising demand for US dollar loans. In addition, SSI's expert also pointed out that since Dung Quat oil refinery has been closed for repairs, the foreign currency demand also increases due to the acceleration of petroleum import. The rise of foreign currency demand will lead to US dollar interest rate hike and affect dong interest rates because banks tend to hoard US dollars, SBV will be unable to purchase US dollars, and they thus they must push up interest rates. Banks' interest rate race heralds danger 30/MAR/2017 INTELLASIA DAN TRI Agreeing with the message recently given by the State Bank of Vietnam (SBV), Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) decided to cut dong deposit rates in the morning of March 28th. Accordingly, the deposit rates in dong of the bank were lowered by percent per annum, close to the levels of large stateowned banks. Previously, many banks also announced to reduce deposit rates in dong, in the context when many banks raised interest rates to high levels by issuing certificates of deposits. As per assessment of SBV, the interest rate adjustment of commercial banks according to their business strategies and market conditions is very normal. Due to the need for capital at a certain point of time, some banks may locally and temporarily increase interest rates and they later will decrease accordingly to market supply and demand. "In fact, the liquidity of the entire banking system is still in abundance and the market has no pressure to raise interest rates. Thus, in general, the deposit and lending interest rates of joint stock banks remain stable", SBV confirmed. Surveying the interest rate level in the afternoon of March 28th, it is found that after being cut by percent per annum, the new deposit rates listed by LienVietPost- Bank were down to the group of joint stock banks which are offering the lowest deposit rates. Talking to reporter of Dan Tri newspaper, Dr Nguyen Duc Huong, Permanent vice Chair of LienVietPostBank said that the decrease of deposit rates may have an impact on the bank's capital inflows but it is insignificant. Dr Huong shared that in addition Intellasia 30 March / 47

6 to competing on interest rates, the bank is also strongly competing in utilities and services, in order to retain depositors. In Dr Huong's point of view, the decision to cut deposit rates across the bank's system partly shows the fact that the pressure on interest rates in the market is currently modest. Dr Huong analysed that the pressure to raise interest rates is mainly created by banks themselves. Since banks are concerned about lacking resources, they want to gradually increase deposit rates to attract customers, while there is no real need. Some financial organisations have mobilised capital at higher interest rates compared to commercial banks' but it is not the pressure from the economy or the pressure from the operating policy of SBV, said Dr Huong, adding that SBV can even lower interest rates if banks all agree. In Dr Huong's point of view, the interest rate hike of some banks may bring them profit in the short term but it signals a danger sign in the future, as customers then will have to borrow at high interest rates, and may fail to repay the loans in the next few years even though they can pay at the current time. "LienVietPostBank does not want to increase deposit rates because there are many lessons in the past. Businesses borrowing more than 50 percent of their normal capital needs at any interest rate level may experience a demise in the future", said Dr Huong. At the online exchange on the movements of interest rates in 2017, Dr Nguyen Duc Do, vice Head of the Institute for Financial Economics predicted that the interest rate would not increase strongly this year and even the next year, because if it goes up, there will be numerous consequences to the economy and the government will not let this happen. Therefore, depositing money on short terms and have expectation for higher interest rates in the long term may not a good idea. Referring to the interest rate trend in the near future, Dr Do said that it mainly depends on how SBV handles the zero-dong banks. Meanwhile, Dr Can Van Luc believed that there is a pressure of interest rate increase but if we are decisive and the management is smart, the lending rates will remain unchanged. In order to do so, the banking industry needs to accelerate and strengthen the restructuring of weak banks and the bad debt settlement; find solutions to increase mobilisation from the population for production and business, and closely monitor internal and external events to have timely response and appropriate psychological measures. Dr Huong highly appreciated the consensus on stabilising interest rate in the system, because that is also a help for banks. Dr Huong believed that the 10 percent and more per annum lending rates currently offered to businesses is a very heavy burden. Those businesses may still be able to pay at the present time, but in the long run, such burden may stop them and then bad debts thus will arise, Dr Huong further analysed. In order to help interest rates follow the right track, Dr Huong recommended SBV to consider extending the deadline to lower the ratio of using short-term funds for medium and long-term lending from 60 percent to 50 percent. Accordingly, SBV should allow banks to reduce this ratio within 2017 instead of completing the reduction in the beginning of the year as stipulated. Many changes seen in joint stock banks after 5 years of restructuring 30/MAR/2017 INTELLASIA VNEXPRESS Half a decade of system restructuring has witnessed many changes in the scale, operation and competition of non-state-owned commercial banks. The balance of profits, the development orientation of banks, therefore, also has many fluctuations was the year when the banking industry officially entered the reform period with a massive restructuring plan. After five years, the appearance of the whole system, especially commercial banks, has changed a lot. From 42, the number of commercial banks has now decreased to 34. The reform also changed the order of non-state-owned joint stock banks, according to figures as of the end of Many brands disappeared, some changed their names, some banks suddenly doubled or tripled in the total asset scale, capital source, etc. through merger and acquisition (M&A). Mid-tier banks also recorded strong momen- Intellasia 30 March / 47

7 tum of growth. In terms of asset scale, top 5 has had many changes with the joining of Saigon Bank (SHB) and Vietnam Prosperity Bank (VPBank) in 3rd and 5th positions, with more than 200 trillion dong each. With doubled total assets thanks to the merger of Southern Bank, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) has risen from No.5 to No.1, replacing Vietnam Technical and Commercial Joint Stock Bank (Techcombank). Two banks leaving this group were Vietnam Export Import Bank (Eximbank) and Asia Commercial Bank (ACB). Also after the deal with Southern Bank, Sacombank became the bank having the largest chartered capital, when the leading unit five years ago - Eximbank - fell to No. 4 position. Saigon Commercial Joint Stock Bank (SCB) - the first bank undergoing M&A in the restructuring period - also appeared in the top 3. In addition, SHB, VPBank and VIB also have fast growth in terms of scale when total assets are times larger. However, while the growth of Sacombank or SHB is largely thanks to merger (SHB merges with Habubank), VPBank and VIB do not go through any M & A. Thus, most of the changes in total assets and charter capital of non-state-owned joint stock banks over the past five years is thanks to M&A. Sacombank is one such example of the strong growth in scale after the "marriage" with Southern Bank. Therefore, a finance and banking expert notices: "If only the scale is assessed, it will be hard to know the real growth because among the names in the leading group, there certainly have many cases that must be controversial. They themselves are also subject to restructuring". Apart from Sacombank and SCB, PVcomBank is also a typical example. According to the State Bank, although all banks have to restructure this year but with the post-m&a consequences, all the three aforementioned banks must undergo a more special and more difficult restructuring process. At the same time, the competition in profits of banks over the past five years is also very dramatic, with many changes in the balance between the North and the South. At the centre of the restructuring, listed banks in the South such as Sacombank, ACB, Eximbank or Navibank (predecessor of NCB) soon revealed troubles and had to spend a lot of time and resources to overcome previous mistakes. Profit growth is therefore also slowing down. Therefore, except for Military Bank (MB) and Techcombank that still maintain stable growth, the remaining banks in the "trillion dong profit" group of 2012 face quite many difficulties: Eximbank declines, Sacombank faces difficulties after the merger with Southern Bank while ACB has just had positive earnings in 2016 after a period of volatility. Looking back over the past five years, the names in the top earning banks have been the ones that have invested heavily in the retail segment and have taken a strong policy on provision since earlier. Like Techcombank, the profit in 2016 was estimated at approximately 3.9 trillion dong, or MB recorded the profit of about 3.65 trillion dong. VPBank is considered as a "phenomenon" of profit. In 2012, the bank's pre-tax profit was only about several hundreds of billion dong. But gradually, since focusing on retail segment rather than trying to "swim" in the wholesale segment, the bank has repeatedly reported large profits. In 2015, VPBank's profit exceeded three trillion dong and in 2016, it was approximately five trillion dong, surpassing the previous "champion" i.e. Military Bank (MB). One source said that the outstanding loan of small and medium enterprises (SMEs), micro-businesses or businesses, households of VPBank in 2016 exceeded four trillion dong. Not to mention, the credit card and mortgage loan segments also contributed as much as 40 percent revenue to individual customer segment with outstanding loans reaching nearly nine trillion dong. In addition, it cannot be denied that VPBank attained high profits thanks to the financial company FE Credit. One-third of 2015 profits and nearly one quarter of the 2016 profits of the bank came from this company. Intellasia 30 March / 47

8 Such cases as VPBank made many other joint stock bank leaders to think that opening finance company is one of the solutions to improve profits. So far, a number of units have operated this type of company. "However, banks will face many challenges in risk management, especially when tapping into consumer lending. Not to mention, the number of employees needed for banks to run a consumer loan company will be very huge, which can also be a problem", said a representative of an audit firm in the Big 4 group. Looking back the restructuring as well as operation process of non-state-owned joint stock banks over the past five years, MB can be considered as the most stable unit in terms of operating efficiency with profits ranging above three trillion dong. Each MB employee currently makes about 340 million dong profit - the highest performance in the group. However, as per experts, this stability can also be considered as a downside when banks are still following the path of cautiousness, slow innovation while many other competitors have planned to make a break through and determined to focus strongly in the retail segment. The profit result of the units in the last two years is a testament. Another characteristic is that while listed banks in the south such as ACB, Eximbank, Sacombank or NCB leveled off after the crisis, Techcombank, VIB or VPBank have had plans to list on the stock market after many urges of investors. VIB has listed since early January 2017 with the starting price of 17,000 dong, much higher than some larger scale banks. In the coming time when joint stock banks are listed on the floor, or are forced to list and the system restructuring scheme is further completed, the situation of this group will continue to change. Financial companies not yet the rivals of banks 30/MAR/2017 INTELLASIA DAN TRI Recently, financial companies pushed deposit rates to around 10 percent per annum through certificates of deposit and commercial banks also pushed the interest rates to around nine percent per annum. This has raised fears about whether financial companies are competitors causing banks to bother in the race for capital? Answering this question at the online exchange on "Interest rate trend" co-organised by Tri Thuc Tre e-newspaper and the financial news page on March 28, Dr Can Van Luc, a finance and banking expert, presumes that there needs to analyse clearly the nature of financial companies in raising capital and lending. Currently, under the law, financial companies are not allowed to mobilise deposits from the people; they can only issue bonds or certificates of deposit for organisations. However, bond issuance is very difficult because the corporate bond market in Vietnam is not complete so it is not easy for financial companies to mobilise much. "I think that financial companies pushed up interest rates is not a concern because the scale of financial companies is very small compared to other credit institutions in Vietnam. The aggregated figures show that the total mobilised capital of this group of company is only about 40 trillion dong, or about 0.7 percent of the total mobilised capital across the credit organisation system", Luc said. Luc concludes that the amount of capital that finance companies now mobilise is just the same as the mobilisation of a smallest bank in the system, so they cannot become competitors with banks. "We estimate that in the first quarter of this year, financial companies have raised (through issuance of bonds, certificates of deposit) only about billion dong while the whole banking sector has exceeded more than 200 trillion dong. In addition, he adds that, because the lending has more risks, the scale is small and the volatility is higher, financial companies inevitably have to pay higher interest rates to depositors. Dr Nguyen Duc Do also agreed with this, saying that the scale of financial companies is too small, the field of operation is different from banks, and their competitiveness is also not large so they cannot be considered as a factor that creates pressure or competes with the banking group in the capital mobilisation. Intellasia 30 March / 47

9 BIDV named best retail bank for third straight year Referring to the issuance of deposit certificates of banks and financial companies at higher interest rates than before, the experts participating in the talks all referred to Circular 06 of the State Bank. Accordingly, Circular 06 stipulates that this year the banking system is only allowed to use 50 percent of short-term capital for long-term loans. Non-bank credit institutions also have to reduce short-term capital for medium and long-term loans from 200 percent before July 2006 to 100 percent, then to 90 percent at the beginning of 2017 and 80 percent at the beginning of That requirement forced banks and financial companies to prepare medium and long-term capital to ensure this ratio, and the certificate of deposit which in essence a long-term deposit is an optimal choice. 30/MAR/2017 INTELLASIA VNA The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) has been named the Best Retail Bank in Vietnam for the third consecutive year by The Asian Banker. Earlier, BIDV won the same award in 2015 and This award honours banks which have made efforts and achievements in providing services for individual clients and created impressive retail business development strategies. The bank also obtained the Best Mortgage Product in Vietnam Award for The titles were presented at an international awards presentation ceremony in Tokyo, Japan, on March 17. Since 2013, BIDV has remained the top joint stock commercial bank in Vietnam in terms of the capital mobilised from individual customers and the retail credit with respective average growth rates of 30 percent and 50 percent each year to The bank has expanded its network nationwide with more than 1,000 transaction offices, many of which have met international standards. It has also signed bilateral agreements with a number of large banks in such countries and territories as Russia, the Czech Republic, Taiwan (China), the Republic of Korea, Malaysia, Cambodia, Japan, Laos, and Myanmar LienVietPostBank plans to list on UPCoM HSBC launches e- customs payments 30/MAR/2017 INTELLASIA VNS LienVietPostBank has planned to deposit shares at the Vietnam Securities Depository and listing on the UPCoM. The news was released at the bank's annual shareholders meeting on Saturday. By December 31, 2016, the bank's charter capital reached VND6.46 trillion (US$284.6 million), while total assets were nearly VND142 trillion. It plans to increase charter capital to VND7 trillion this year through the issue of 54 million shares. The bank posted pre-tax profit of nearly VND1.35 trillion in 2016, 3.2 times higher than the previous year. Thanks to a recoupment of VND509 billion of non-performing loans (NPL) in 2016, the bank's NPL ratio by the end of 2016 stood at 1.08 per cent of total outstanding loans. With nearly 140 branches and transaction offices nationwide, LienVietPostBank's network ranks first among the country's joint stock commercial banks. 30/MAR/2017 INTELLASIA VN ECONOMIC TIMES Channel allows bank customers to pay taxes, fees and charges to offices of Vietnam Customs. HSBC Vietnam has signed a cooperative agreement with Vietnam Customs to launch e-customs payments, which will provide HSBC customers with a more convenient customs payment process online. Upon registering for the service, HSBC customers will be able to use the bank's electronic banking channels to pay taxes, fees and charges to customs offices. Customers Intellasia 30 March / 47

10 will also benefit from a reduction in payment errors and can expect faster customs clearance on goods and better operational efficiency when importing goods into Vietnam. The cooperation with Vietnam Customs also allows HSBC to retrieve electronic information on customs declarations directly from the e-customs gateway. HSBC customers no longer have to provide forms for customs declarations when making payments. The initiative is in line with the direction issued previously by the Ministry of Finance calling for greater cooperation between banks and Vietnam Customs to enhance administrative formalities, quicken the customs clearance process, bring convenience to customers, and modernise the collection of State budget funds. "At HSBC, developing payment solutions on digital platforms has been one of our key focuses in recent years to offer our customers greater convenience," said Nguyen Thi My Hanh, Head of Global Liquidity and Cash Management. "This cooperation with Vietnam Customs is the latest step on this journey, one that is further contributing to Vietnam's digital transformation." "Each digital solution that we introduce not only saves time for HSBC customers, so they can focus on their business, but also contributes to Vietnam's financial development, enhancing the country's competitive edge by moving away from cash payments, as we have been urged to do by the State Bank of Vietnam." HSBC also partnered with the general Department of Taxation to launch an online tax payment platform, in December 2015, becoming one of the first foreign banks to apply an extended "cut off time" for Online Tax Payments, to 8pm, providing more time for customers to meet their tax obligations. The move is in also line with an earlier comment from the CEO of HSBC Vietnam Pham Hong Hai, who told VET that the bank will continue to digitalise to further streamline processes, deliver automation to corporate clients, and enhance their digital channels to increase customer engagement in the retail business. The bank will also continue to leverage its international network to support clients' business, specifically focusing on business corridors with leading foreign-invested enterprises in Vietnam and industry leaders, providing them with a one-stop solution while growing its retail portfolio. HSBC Holdings, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 4,000 offices in 70 countries and territories in Europe, Asia, North and Latin America, the Middle East, and North Africa. With assets of $2.375 trillion at December 31, 2016, HSBC is one of the world's largest banking and financial services organisations. HSBC has been in Vietnam for more than 140 years, opening an office in HCM City in It was the first foreign bank to launch a locally-incorporated entity, on January 1, Its current network includes two branches and five transaction offices in HCM City, one branch and four transaction offices in Hanoi, and three full service branches in Binh Duong, Can Tho, and Da Nang. HSBC is one of the largest foreign banks in the country in terms of investment capital, network, product range, staff, and customer base. Vietcombank the only bank in Top 10 Best Places to Work /MAR/2017 INTELLASIA VN ECONOMIC TIMES Vietnam's biggest lender outpaces domestic and foreign banks in the country to secure top place among banks in "The 100 Vietnam Best Places to Work 2016". Leaving both foreign and domestic banks behind, Vietcombank continued to assert its position in Vietnam by being the only bank in the Top 10 Best Places to Work 2016, moving up five places from The 100 Vietnam Best Places to Work 2016 list was compiled via independent research by Anphabe, the biggest career network of management professionals in Vietnam, and Nielsen, a global market research firm, and was based on feedback from 26,128 participants from three generations in 24 industries. Intellasia 30 March / 47

11 The bank was also acknowledged as one of the Top 3 companies in welfare policies for employees. It is now among the leading banks in Vietnam, with high quality assets and operational effectively, and is striving to become the top bank in Vietnam and among the Top 300 largest financial institutions in the world by It has set five specific targets: being the best bank in retail and in the Top 2 in wholesale, having a return on equity (ROE) rate of at least 15 per cent, leading in terms of customer satisfaction, having the best quality human resources, and being the best bank in international-standard risk management. Vietnam's biggest lender by market value, Vietcombank saw after-tax profit in 2016 surge 28 per cent while its bad debt ratio was kept at 1.48 per cent as at December 31, the bank's consolidated financial statement for the fourth quarter of 2016 reveals. Total assets were VND788 trillion ($34.92 billion), up 17 per cent year-on-year, and charter capital rose 35 per cent to VND35.9 trillion ($1.59 billion) as at December 31. Pre-tax profit stood at VND2.2 trillion ($97 million) in the fourth quarter, for VND8.5 trillion ($377.5 million) during the year as a whole, up 24 per cent against Aftertax profit reached VND6.85 trillion ($303.3 million), up 28 per cent. Earnings-per-share (EPS) rose 16 per cent to VND1,897 ($0.08). As at the end of 2016, bad debts totalled VND6.84 trillion ($303 million), equal to 1.48 per cent of total outstanding loans and down 0.36 per cent compared to the beginning of the year. Vietcombank was the first lender to buy back all debts it sold to the Vietnam Asset Management Company (VAMC). The initial amount of cumulative debts was VND6.5 trillion ($288 million), while the value of VAMC's bonds in exchange was only VND4 trillion ($177 million). Its share price rose 36 per cent during the year, giving it a market value of $6.2 billion. The lender trades at about three times the book value, compared with an average of 1.1 times for listed Vietnamese banks. Vietcombank's biggest shareholder, the State Bank of Vietnam, owns 77 per cent, while the Mizuho Financial Group Inc. is its second-largest shareholder, with 15 per cent. This was the fourth year Anphabe has partnered with Nielsen to conduct the Best Place to Work research in Vietnam. The standard assessment consists of 46 factors with six main criteria: salary, bonuses and welfare; work-life balance; culture and values; development opportunities; company brand; and leadership team. Vietnam's growth slows down to 5.1pct in Q1 30/MAR/2017 INTELLASIA VNA Vietnam posted a gross domestic growth (GDP) rate of 5.1 percent in the first quarter of 2017, signalling a slowdown compared to the first-quarter rates of 6.12 percent in 2015 and 5.48 percent in General director of the general Statistical Office (GSO) Nguyen Bich Lam revealed the information at a press conference in Hanoi on March 29. He attributed the slower growth partly to the year-on-year growth of 2.03 percent in the agro-forestry-fishery sector. The sector's growth is higher than the same period last year but still the second lowest rate since The industry and construction sector increased by 4.17 percent from a year earlier, 2.99 percentage points lower than that in Q1 of 2016 and also the slowest pace since 2011, as the mining industry contracted by 10 percent. Meanwhile, the services sector enjoyed the best performance since 2012 as it posted a 6.52 percent rise in the reviewed time, according to director of the GSO's National Account Department Ha Quang Tuyen. Export turnover is estimated at 43.7 billion USD in Q1, up 12.8 percent year-on-year, with big rises recorded in the shipments of electronic products, computers and components (42.3 percent); textile and garment (10.2 percent); machinery, equipment and spare parts (34.6 percent). About 80.5 trillion VND (3.54 billion USD) of foreign direct investment was registered in the three-month period through March. Intellasia 30 March / 47

12 Meanwhile, retail sales of goods and services totalled trillion VND (nearly billion USD), climbing 9.18 percent from the same period last year. The rate is 6.2 percent if price hikes are excluded, lower than the 7.5-percent expansion in Q1 of 2016, indicating slower growth in the economy's aggregate demand and purchasing power, the GSO said. This office added in the three months, 26,478 businesses were set up with a combined registered capital of nearly trillion VND (11.93 billion USD), up 11.4 percent in the company number and 45.8 percent in the capital year-on-year. Meanwhile, another 9,271 firms resumed operations. General director Lam forecast more difficulties and challenges, instead of favourable conditions, for the remaining months of It will be hard to achieve the targeted growth rate of 6.7 percent this year if the economy does not make breakthrough from now to the end of the year. Therefore, the government, sectors, authorities at all level, the business community, and the entire society must be proactive and flexible to overcome obstacles and realise the socio-economic development targets set by the National Assembly, he added vnp CPI goes up 4.96pct year-on-year in first quarter 30/MAR/2017 INTELLASIA VNA Consumer price index (CPI) in the first quarter of 2017 increased by 4.96 percent yearon-year, according to the general Statistical Office (GSO). Director of the GSO's Price Statistics Department Vu Thi Thu Thuy said on March 29 that CPI in March alone rose 0.21 percent from the previous month, 0.9 percent from last December, and 4.65 percent from the same period last year. Eight of the 11 groups of goods and services in the price basket saw their prices increase. The biggest monthly price hike, 7.51 percent, was recorded in medicine and healthcare services. They were followed by education (up 0.75 percent), housing and construction materials (0.5 percent), and traffic (0.39 percent). The four other groups posted price expansion of between percent. Meanwhile, prices dropped 0.87 percent in the food and food services, 0.12 percent in the group of garment, footwear and hat, and 0.02 percent in beverage and cigarette. Thuy said CPI usually declines in March due to lower consumption demand after the Lunar New Year holiday. She attributed this year's CPI rise in the month to the government's scheduled augmentation of medical and educational services' fees. Domestic gold prices fluctuated in line with the global market in March. After the US Federal Reserve raised its benchmark interest rate, the world's average gold price in March to March 24 went down 12.7 USD from the February average to 1, USD per ounce. Gold price in March fell by 0.28 percent month on month to 36 million VND (1,584 USD) per tael. USD price also rose from February to 22,700-22,800 VND per USD in the unofficial market due to stronger demand for the foreign currency to serve import activities. The GSO said March's core inflation, which is the CPI excluding food items, energy products and the State-managed commodities of medical and educational services, remained unchanged from the previous month and went up 1.6 percent from a year earlier. The core inflation in Q1 rose 1.66 percent from the same period of The GSO predicted a higher increase in CPI in April compared to the March growth rate, fuelled by slight rises in food, beverage and garment prices. Some provinces may also raise school fees in line with the government's roadmap vnp Intellasia 30 March / 47

13 Export growth beyond expectations in first quarter 30/MAR/2017 INTELLASIA VNA Vietnam's exports in the first three months of the year went beyond expectations with total export value estimated at billion USD, up12.8 percent from the same time last year. Phan Van Chinh, director of the Import-Export Department under the Ministry of Industry and Trade, said the export turnover of the domestic sector grew by 12 percent while that of foreign-invested expanded by 13 percent. Exports of agro-forestry-aquatic products enjoyed remarkable achievements when they went up by 12.2 percent and made up 12.5 percent of the total export revenue, higher than last year's figure of 11 percent. The manufacturing sector still kept its export growth trend, reaching 12.5 percent. Meanwhile, shipments of minerals and fuel saw recovery thanks to an increase in prices of oil and other goods. However, the country splashed out billion USD on imports in the period, which led to a trade deficit of 2 billion USD, or 4.4 percent of the total export revenue. Chinh said that this was spurred by a plunge of 828 million USD in export revenue of Samsung company, which dragged down growth of manufacturing product exports. In addition, the increased imports of materials for domestic production like computers, components and leather also contributed to the trade deficit. Furthermore, the disbursement of 3.6 billion USD by foreign-invested projects to purchase equipment and machines like Samsung Display project in Bac Ninh and fiber project in Binh Duong also affected the country's import revenue. Minister of Industry and Trade Tran Tuan Anh said that local enterprises should focus on diversifying export products to avoid dependence on key exports like mobile phones as their decreased turnover will have critical impacts on the total export revenue vnp Vietnam faces return of trade deficit Agro, forestry, fishery export value up by 7.6pct 30/MAR/2017 INTELLASIA DTI NEWS Vietnam has recorded a trade deficit of nearly USD2 billion so far this year following the trade surplus of USD2.7 billion in According to the general Statistical Office, after many years of trade deficit, Vietnam reported a trade surplus of USD2.7 billion in However, since the beginning of this year, the country has witnessed a sharp rise of trade deficit of nearly 2 billion. In many cases in the increase in the trade deficit was due to the higher demand for the local economy's production activities, which was a positive indicator. But the remarkable rise in trade deficit in the context of the country's economic slowdown is worrisome. In the first two months of this year, industrial production value only increased 2.4 percent against the same period of last year. In February, the country licensed 5,460 new businesses, down 39.3 percent on-year. Meanwhile, foreign direct investment also decreased, compared to the same period last year. The high trade deficit so far this year is partially attributed to the increasing import of cars from Asean countries due to lower taxes. Following the Asean Trade in Goods Agreement, Vietnam will fully remove tariffs on imported cars from Asean countries from Meanwhile, the exports have seen a slow growth because of problems related to the quality of Vietnamese goods and trade barriers from foreign countries. 30/MAR/2017 INTELLASIA VNS Vietnam gained a year-on-year increase of 7.6 per cent in total export value of agro, forestry and fishery products in the first quarter of this year to $7.6 billion. This included $2.9 billion in March, according to the Ministry of Agriculture and Rural Development. Of the total figure for Q1, export value of main farming products reached $4.2 billion, Intellasia 30 March / 47