Vietnam Retail Market

The main reason was attributed to the fact that domestic banks were too enthusiastic to offer loans without fully seeing changes of the economy, which resulted in slow deposit growth.

PhD. Le Tham Duong, dean of business department under HCM City Banking University said that limiting risks is the biggest risk of domestic banks because only four out of 38 joint stock banks nationwide meet requirements on risk management.

He said that in 2010, domestic banks would still have to continue facing various difficulties. The first difficulty is suffering from the credit growth of up to 38 percent in 2009. Then, Vietnamese banks have to face tough competition from foreign banks right in the local playing field when Vietnam opens up to banking activities under the country's WTO commitments.

Ly Xuan Hai, CEO of Asia Commercial Bank (ACB) said that the year 2010 would be the time for tough competition of domestic banks in the retail sale market against 100 percent-foreign-owned banks.

The country's population of over 86 million people, of which young people aged less than 33, who often change their shopping behaviours, account for over 60 percent, is the basis for foreign banks as well as domestic banks focus on developing credit services over the last time and particularly in the next year.

Nevertheless, according to economic experts, although bringing about relatively high profits, credit also contains various risks in the banking sector.

Hai said that ACB has timely built a thorough business strategy based on such criteria as good management, proper profit, and sustainable growth. And in 2009, ACB reported pre-tax profit of nearly 2.818 trillion dong.

PhD. Le Xuan Nghia, vice chair of National Financial Supervising Committee said, "In 2008, 2009, through inspections for the banking system, we see that ACB is always well recognised for its good performance."

"For the first time after 15 years of operation, we had to adjust our business targets for three times within one year (2008) because of negative changes of the economy," added Hai.

Additionally, Hai shared his experience in risk management over the last two years. "As a bank, we do business based on belief, hence, instead of pursuing short-term profit and hot money earning opportunities, ACB has patiently generated profits in a stable manner and created potential for bigger profit in the future."

PhD. Le Tham Duong emphasized that domestic banks should learn to "bow" more, particularly in 2010. That is because the lower bow is, the more clients banks can attract. That is business." Duong said that the most visible weakness in the upcoming competition of domestic banks is human resource.

Many domestic banks now do not have highly-qualified senior human resource while employees contacting directly