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Banks to thrive by focusing on fundamentals   2009-03-19 - Viet Nam News

On the sidelines of the two-day Business Roundtable concluded yesterday in Ha Noi, Viet Nam News spoke to Paul Leech, Head of HSBC Asia Pacific and chairman of HSBC (Viet Nam) Ltd, and Tom Tobin, chief executive officer of HSBC (Viet Nam) Ltd, about the national economy and bank operations.

Many economists forecast that 2009 will be a tough year. What’s your projection for the economy overall, and for the banking and finance sector, in particular?


The economic and financial storm has swept over the globe, leaving countries, from economic giants to those still developing, with difficulties. Viet Nam is not an exception. 2009 will be a tough year for the Vietnamese economy and the financial and banking sector. Banks and financial institutions will have to work harder and be more clever and deliberate in doing their business. They will have to look at new lending more carefully while continuing to grow business with their existing good customers. The expansion of banks will not be as aggressive as we have witnessed in the last few years. I think banks will get back to basic development. They will put more focus on improving the quality of banking services and products. However, there are also opportunities in 2009 to grow business as the strong fundamentals of Viet Nam are still there with young population and a stable, pro-business environment. I believe that banks and corporations which can find ways to adapt to the challenging changes ahead will certainly come out of the financial turmoil in a stronger position.

What do you think about the Vietnamese Government’s stimulus package? Will it help the economy?

Leech: To me, the stimulus package is big in relative terms. In terms of percentage of GDP, it is one of the biggest stimulus packages in Asia. I think it will help if it is targeted and delivered to the export sector. The authorities have also taken other actions to help banks support the economy, such as the reduction in reserve requirements and easing some caps around the interest rate market. A reduction in inflation also helps many businesses from the perspective of reducing costs.

HSBC (Viet Nam) Ltd began operations earlier this year. What’s the difference in operations, services and products, before and after the incorporation?

Leech: The local incorporation gives us greater advantages to open more branches and transaction offices in Viet Nam. But in term of the products, I think there will be no significant differences. There will also no material difference for our customers walking into our branch before and after the local incorporation. They will still see the same red and white in HSBC logo, the same product offerings, and still experience the same world-class service standard.

Tobin: Yes, the significant change lies in the widening of our distribution network. We currently have 135 ATMs which is a big growth from the number of 25 ATMs we had a couple of years ago. We will open up more transaction offices and branches in HCM City and Ha Noi, and we hope to open a branch in southern Binh Duong Province. We will continue to be a bridge for foreign investors who want to invest in Viet Nam and also for Vietnamese companies exporting abroad, gradually expanding our customer base to include more Vietnamese retail and corporate customers.

With the global economic downturn, what is HSBC’s strategy for development in Viet Nam? Will there be any changes in your strategy?

Leech: Viet Nam remains one of the most interesting emerging markets in the Asia Pacific. Our group’s chairman has talked about it in our group results, that we would focus on emerging markets for our shareholders’ benefit. If you bring all that together, Viet Nam is a classic market for us in terms of its attractiveness. We will continue to be an investor here. Local incorporation in Viet Nam is a sign of the investment and we are also looking to increase the amount we invest and do more with our strategic partners.

Tobin: Our strategy for development in Viet Nam will not change. We believe that the middle- and long-term outlook for Viet Nam remains favourable. We have a long-term commitment to develop in Viet Nam via a two-pronged strategy. One is the strong, organic growth of our own operations in which recent local incorporation is a tangible proof. The other is our investments in the strategic partners, Techcombank and Bao Viet.

We will continue to strengthen our presence in Viet Nam. We are looking at new business opportunities brought about through an expanded network and chances to team up with our strategic partners in providing more convenience to our customers.

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