Vietnam Banking & Financial Services Report - Q3 2022 - Shared by WorldLine Technology

Q3 2022
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Vietnam
Banking & Financial Servic
Services
es
Report
Includes 10-year forecasts to 2031



Vietnam Banking & Financial Services Report | Q3 2022

Contents
Key View............................................................................................................................................................................................ 5
Banking Industry Risk Indicator ............................................................................................................................................... 8
Banking Industry Risk Indicator Scores ...............................................................................................................................11
SWOT ................................................................................................................................................................................................12
Banking & Financial Services SWOT ....................................................................................................................................................................................12

Banking ...........................................................................................................................................................................................13
Banking Snapshot ......................................................................................................................................................................................................................13
Downside Risks To Financial Stability Remain Elevated In Vietnam ......................................................................................................................14
Forecast Tables ............................................................................................................................................................................................................................17
Competitive Landscape ..........................................................................................................................................................................................................19
Regulatory Environment .........................................................................................................................................................................................................24

Insurance........................................................................................................................................................................................25
Insurance Snapshot...................................................................................................................................................................................................................25
Competitive Landscape ..........................................................................................................................................................................................................27

Regulatory Environment .........................................................................................................................................................................................................31

Asset Management .....................................................................................................................................................................32
Asset Management Snapshot ...............................................................................................................................................................................................32
Competitive Landscape ..........................................................................................................................................................................................................33
Regulatory Environment .........................................................................................................................................................................................................35

Stock Exchanges..........................................................................................................................................................................36
Stock Exchanges Snapshot ....................................................................................................................................................................................................36
Competitive Landscape ..........................................................................................................................................................................................................37
Regulatory Environment .........................................................................................................................................................................................................39

Macroeconomic Overview ........................................................................................................................................................41
Vietnam To See Growth Accelerate In 2022 But Headwinds Are Rising ..............................................................................................................41
Macroeconomic Forecasts .....................................................................................................................................................................................................45
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THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

Household Income Forecasts ...............................................................................................................................................................................................47

Vietnam Demographic Outlook ..............................................................................................................................................49
Banking & Financial Services Methodology........................................................................................................................52
Banking Industry Risk Indicator Methodology ..................................................................................................................53

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

Key View
Key View: Vietnam's banking and financial services industry retains scope for growth over the long term, driven by economic
growth averaging around 6.0% per annum through to 2031, which will support rising incomes and expand the country's alreadygrowing middle class. The broadly stable Vietnam government is open to cooperating with the rest of the Asian region, a stance that
will benefit the adoption of new technologies and best practice in the industry. Once the effects of the Covid-19 pandemic have
abated, the government is expected to begin reducing state ownership in the sector and move forward with the adoption of policies
to boost both private sector and foreign involvement in local capital markets.
Vietnam’s banking sector assets are not as concentrated as in some developing countries but the state has a large role in the sector.
Although banks been slow to adopt Basel standards for capital adequacy, in recent years they have made strides in reducing nonperforming loans and aligning loan growth with increases in deposits. We also note that four banks, all of which are at least partly
state owned, continue to dominate Vietnam’s banking sector. Digital services are gaining traction among the large proportion of the
population that is unbanked, and green lending is also on the rise.
Vietnam's insurance market has enormous growth potential given the country's large population and a low rate of penetration.
There are a number of structural factors in place that are supportive of continued rapid growth of the dominant life segment,
including a young population, urbanisation, an expanding middle class, the absence of a comprehensive social security system, high
savings rates among households that can afford to, and innovation by multinational life insurance companies who consider
Vietnam's market to be a growth opportunity. The smaller non-life segment also maintains development prospects, although unlike
the life segment, the already competitive landscape is dominated by indigenous insurers, many of which have traditionally been
linked with large SOEs. We also note that the emergence of new insurtech platforms across both segments will make it easy for firsttime customers to buy insurance and encourage innovations in the types of coverage that individuals and businesses can afford.
Vietnam's asset management industry remains small, largely due to the lack of institutional investors that drive business in most
other countries. In 2022, we estimate that the average disposable income of Vietnamese households stood at USD5,500, some way
below the USD10,000, which is considered the point at which asset management services targeted at individuals becomes
attractive and viable. By 2026, however, we currently forecast some 19.2% of households will surpass that USD10,000 mark, a view
that provides strong potential for the expansion of the asset management sector in Vietnam.
The development of Vietnam's stock market has entered a new phase. The government is in the process of re-organising the
country's two exchanges under a single entity so that one exchange focuses on stocks and the other on bonds and other products.
There is ongoing cooperation between Vietnam, Japan and ASEAN to help integrate Vietnam’s stock market into the broader Asian
financial sector. The Vietnamese stock market comprises two trading entities, and remains dominated by domestic investors.

Foreign investment continues to be limited due to the relatively low liquidity of the markets, in addition to Vietnam's status as a
frontier rather than an emerging market. In its economic restructuring plan for 2021-2025, the Ministry of Planning and Investment
set out goals for the stock market that are designed to make Vietnam’s stock exchanges competitive with those of other ASEAN
members.

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

Upbeat Long-Term Outlook For Financial Services Amid Favourable Demographics
Vietnam - Working Age Population, 15-64, '000

e/f = Fitch Solutions estimate/forecast. Source: UN, Fitch Solutions

Latest Trends And Developments
• We maintain our forecast for bank credit growth of 15.0% in 2022, driven by a rebound in economic growth. However, national
indebtedness continues to rise and the relatively under-capitalised banking sector remains vulnerable to an increase in nonperforming loans. The economic effects of the Russia-Ukraine conflict pose an additional downside risk.
• The value of total insurance premiums written is forecast to rise by 13.0% in 2022, a slight uptick from our previous forecast
(12.9%). Growth is forecast to average just over 12.3% per annum through 2026 across in the life segment and 11.5% in the nonlife lines.
• The total value of assets under management (AuM) by fund management companies in Vietnam reached approximately
VND570.0trn (USD24.7bn) in 2021. This represents growth of 31% y-o-y. The regulator reported that from 2015 to the end of
2021, AuM grew by an average of 15-25% per annum.
• Buy trades made by foreign investors on both of Vietnam’s main stock exchanges totalled VND40.9bn in March 2022, while sales
hit VND44.8bn, resulting in a net loss of VND3.9bn.

FINANCIAL SERVICES FORECASTS (2020-2025)
Indicator
Finance nominal GVA, USDbn
Finance USD nominal growth, % y-o-y
Finance nominal GVA, VNDbn
Finance VND nominal GVA growth, % y-o-y
Finance nominal GVA, % total GVA

2020e

2021e

2022f

2023f

2024f

2025f

13.91

20.06

22.35

24.66

26.94

29.41

-0.1

44.3

11.4

10.3

9.3

9.1

322,739.53

464,594.14

514,154.91

569,677.35

625,930.28

690,008.23

0.6

44.0

10.7

10.8

9.9

10.2

5.73

6.29

6.29

6.32

6.33

6.33

e/f = Fitch Solutions estimate/forecast. Source: National Statistics Office, Fitch Solutions

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

FINANCIAL SERVICES FORECASTS (VIETNAM 2026-2031)
Indicator

2026f

2027f

2028f

2029f

2030f

2031f

Finance nominal GVA, USDbn

31.89

34.53

37.38

40.46

43.80

47.45

8.4

8.3

8.2

8.2

8.3

8.3

755,673.25

826,472.54

903,493.48

987,755.56

1,080,113.71

1,181,698.76

9.5

9.4

9.3

9.3

9.4

9.4

6.32

6.30

6.27

6.24

6.22

6.19

Finance USD nominal growth, % y-o-y
Finance nominal GVA, VNDbn
Finance VND nominal GVA growth, % y-o-y
Finance nominal GVA, % total GVA

f = Fitch Solutions forecast. Source: National Statistics Office, Fitch Solutions

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

Banking Industry Risk Indicator
Banking Industry Risk Indicator

Note: Scores out of 100; higher scores imply lower risk. Source: Fitch Solutions

Key View: Vietnam's Banking Industry Risk Indicator (BIRI) score in Q122 is 35.48, indicating moderately high banking sector risk
relative to the other markets we assess. We rank each market out of 122, where first is lowest risk and 122nd is highest risk. Vietnam
is in 88th position.

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

BIRI Score Falling Steadily
Vietnam – BIRI Scores & Historical BIRI Average

Note: Scores out of 100; higher scores imply lower risk. Source: Fitch Solutions

BIRI Overview: Vietnam’s BIRI score has been on a broad downward trend, falling from 38.05 in Q121 to 35.48 in Q122, implying
higher risks. The market's scores for the International Linkages and Economic Volatility metrics are high, but its Government Finance
and Financial Component scores remain low. Vietnam ranks 88th of the 122 markets captured in our analysis.
Financial: The Financial component score fell from 33.67 in Q121 to 30.09 in Q122, implying higher risk. Its capital buffers have
been trending downwards, while underlying asset quality has been falling, despite headline non-performing loan figures holding up.
Economic Volatility Has Led To Higher Risks
Vietnam - BIRI Component Scores

Note: Scores out of 100; higher scores imply lower risk. Source: Fitch Solutions
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

Government Finance: Vietnam’s Government Finance score fell from 45.40 in Q121 to 41.92 in Q122, implying higher risk. In
Q122, the Government Debt (% of GDP) component stood at 41.38%, up from 39.22% in Q121. Government Interest Payments (%
of revenue) also remained high at 10.09% in Q122. However, the Government Balance (% of GDP) component recorded a smaller
deficit of 7.32% in Q122, compared to 7.58% in Q121.
Regulatory Quality & Environment: Vietnam’s Regulatory Quality & Environment score has generally been rising over the past
few years, with the score standing at 46.49 in Q122. The country's business environment has continued to improve due to
economic reforms adopted by Vietnamese authorities since 2016, which were aimed at making the market more attractive to
foreign direct investment.
Living Standard: Vietnam's Living Standard component score rose to 54.17 in Q122 from 52.74 in Q121, implying lower risk.
Continued rises in this score are the result of strong economic growth in Vietnam, which raised GDP At PPP, USD Per Capita to 9,442
in Q122.

International Linkages: Vietnam’s International Linkages component score fell to 68.52 in Q122 from 69.60 in Q121, implying
higher risk. This was driven by a fall in the Current Account Balance (% of GDP) component, from 5.68% in Q121 to 2.95% in Q122.
However, Gross External Debt (% of GDP) fell from 37.68% to 33.08% over the same period.
Economic Volatility: The Economic Volatility score fell from 66.64 in Q121 to 62.39 in Q122, implying higher risk. The fall reflects
rising volatility in both economic growth and inflation in the country.

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

Banking Industry Risk Indicator Scores
ASIA-PACIFIC BANKING INDUSTRY RISK INDICATOR SCORES

BIRI

Financial
Component

Government

Living

Finance

Standard

Component

Component

Regulatory
Quality &
Environment
Component

International
Linkages
Component

Economic
Volatility

Singapore

95.43

65.95

61.85

100.00

100.00

85.19

57.14

Hong Kong, China

90.91

82.72

66.93

92.88

94.97

55.80

45.77

Taiwan, China

77.83

30.53

66.59

90.53

87.98

90.25

77.38

Australia

76.09

55.71

42.79

89.44

91.99

57.61

64.22

South Korea

74.25

51.05

58.60

87.18

80.69

56.89

74.19

Japan

71.47

53.19

36.59

84.82

87.26

54.83

71.71

Malaysia

69.77

76.78

36.84

77.05

73.33

65.63

44.17

New Zealand

60.45

26.98

50.65

85.99

92.28

41.66

66.63

Indonesia

54.10

66.40

35.57

61.73

51.64

55.62

65.83

Mainland China

52.42

47.20

49.39

68.63

54.16

64.39

62.66

Maldives

41.92

98.46

15.63

67.41

30.69

21.05

23.66

Thailand

41.07

42.09

40.46

68.74

53.70

46.10

48.97

Philippines

38.00

58.41

32.67

54.23

42.96

55.37

42.67

Vanuatu

36.65

66.99

54.64

35.12

23.45

60.22

58.18

Vietnam

35.48

30.09

41.92

54.17

46.49

68.52

62.39

Solomon Islands

34.16

96.62

52.09

25.72

11.88

46.40

37.40

India

33.81

57.99

18.87

49.80

46.98

56.13

37.41

Sri Lanka

30.71

52.09

0.00

63.61

40.34

43.99

50.35

Pakistan

29.04

67.46

16.90

42.53

23.90

51.40

51.95

Bangladesh

20.82

39.48

34.05

44.70

18.74

51.96

61.84

Fiji

20.63

55.66

16.63

55.54

36.64

19.37

27.54

Afghanistan

15.31

89.46

29.52

24.14

0.00

0.00

51.32

Cambodia

15.05

22.17

59.93

41.52

26.73

34.34

57.57

Note: May include territories, special administrative regions, provinces and autonomous regions. Scores out of 100; higher scores imply lower risk. Source: Fitch Solutions

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

SWOT
Banking & Financial Services SWOT
SWOT Analysis
Strengths

• Vietnam's economy is expected to post real GDP growth of around 6.0% per annum through to 2031, which
will allow income levels to steadily rise.
• The country has a large and growing population with a high savings rate and potential for faster income
growth.
• The government is relatively stable and is open to foreign cooperation in integrating its financial services
markets with the rest of Asia.
• The government has stated a willingness to speed up the process of privatising state-owned banks and
other entities, which will provide additional domestic investment opportunities.

Weaknesses

• Domestic banks continue to lag behind their foreign peers in terms of financial strength and the
technological curve and have been slow to implement Basel standards for capital adequacy.
• Many domestic non-life insurance companies are sub-scale and lack ready access to new capital.
• Most Vietnamese households do not have sufficient income to purchase non-essential insurance products.
• The country's two stock exchanges lack scale in a competitive region, and the continued lack of new initial
public offerings limits their attractiveness.

Opportunities

• There is significant potential for adopting cash-free payment systems and new mobile banking and
insurance technologies, which the State Bank of Vietnam is encouraging.
• Rising wealth may allow households to expand insurance cover and take advantage of financial planning
activities.
• If executed, the government's divestment programme should support growth in the local capital market.
• Vietnam's government is gradually easing restrictions on foreign companies and appears more receptive to
overseas investment and ownership.

Threats

• There is limited private sector competition in the banking and non-life insurance sectors.
• Continued high levels of government debt could yet trigger a fiscal crisis, undermining confidence in the
banking sector.
• Though foreign competition is needed, allowing ASEAN and EU banks to have more of a presence may
threaten domestic development.
• Preferences for traditional investments such as gold and property could constrain the expansion of financial
planning and asset management activities.

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

Banking
Banking Snapshot
Key View: Four banks, all of which are at least partly state owned, dominate Vietnam’s banking sector. The smaller banks operating
in the country continue to struggle with scale, as evidenced by the number of announcements regarding banks issuing bonds and
equity, or seeking foreign partnerships to increase their capital base. Digital services are gaining traction among the large proportion
of the population that is unbanked and green lending is also on the rise.
Latest Trends and Developments
• The expected rebound in Vietnam's 2022 real GDP growth, forecast at 6.8% (down from our previous forecast of 8.0%) will
support annual bank loan growth of 15.0%. However, loan growth in excess of nominal GDP growth (forecast at 10.4%) implies a
further increase in national indebtedness.
• In May 2022, the State Bank of Vietnam (SBV) approved an application from the Asia Commercial Joint Stock Bank to
increase its charter capital. The bank will increase its charter capital by the maximum amount of VND6.8bn through the issuance
of new shares.
• In April 2022, the SBV approved the network development of the Joint Stock Commercial Bank for Foreign Trade of
Vietnam to establish five new branches in the country.
• In January 2022, a report from cloud banking platform Mambu revealed that in Vietnam, 70% and 54% of consumers have
made greater use of digital banking services because of the pandemic. These numbers are higher than the global average (61%
and 41% respectively). In November 2021, the deputy governor of the SBV remarked at a conference on smart banking that
around 95% of lenders in Vietnam have been pushing a digital transformation strategy.

Consistent Long-Term Growth Ahead
Vietnam - Total Banking Assets (2020-2031)

e/f = Fitch Solutions estimate/forecast. Source: IMF, Fitch Solutions

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

Downside Risks To Financial Stability Remain Elevated In Vietnam
Key View:
• We at Fitch Solutions reaffirm our view that financial stability risks in Vietnam are likely to remain elevated over the coming
quarters.
• A heavily indebted private sector, combined with deteriorating asset quality and low capital buffers among banks mean that the
banking system remains vulnerable to economic shocks and tightening global credit conditions.
• Nevertheless, a continued economic recovery bodes well for the performance of the banking sector this year.
We at Fitch Solutions expect financial stability risks to stay elevated in Vietnam. The country’s private sector debt burden
is very high compared to peers with similar levels of development, and has continued to rise over the last few years. Moreover,
regulatory forbearance enacted during the pandemic has likely masked the true weakness of the banking sector. We will get a
clearer picture of the health of Vietnamese banks in the coming months, but underlying asset quality has probably already
deteriorated significantly due to the severe economic slowdown triggered by the Delta variant of Covid-19 last year. Finally, with low
capitalisation levels, Vietnamese banks may not be able to withstand prolonged economic shocks. On the positive side however, the
operating environment for Vietnamese banks should continue to improve over the coming quarters on the back of a robust
economic recovery.

Vietnam & Cambodia Stand Out As Having Low Income Relative To Indebtedness
Top 20 Most Indebted Economies (2020) - Domestic Credit To Private Sector, % Of GDP (X-Axis) Versus GDP Per Capita, USD (Y-Axis)

Source: World Bank, Fitch Solutions

Vietnam’s private sector is extremely indebted, particularly so given its low level of GDP per capita which stood at around USD3,700
at the end of last year. The latest figures from the World Bank show that domestic credit owed by the private sector amounted to
147.7% of GDP in 2020, ranking 12th in the world and even above the UK which is about 14 times wealthier in GDP per capita terms

(see chart above). Moreover, the State Bank of Vietnam is aiming to boost credit growth further to 14.0% in 2022, from an actual
expansion of 13.6% in 2021. The central bank is likely to keep most other policy settings fairly accommodative too, which suggests
to us that credit will continue to expand at a faster pace than nominal GDP. We forecast credit growth to accelerate to 15% in 2022,
versus nominal GDP growth of 10.8%.
We note that such high levels of indebtedness are a key risk to financial stability, especially with the global monetary environment
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

set to tighten over the coming quarters. The Federal Reserve hiked its policy rates by 50bps on May 4 and, in our view, it will tighten
policy further by 100bps, which would bring the Fed Funds rate to 2.00% by year end.

Loan Forbearance Obscures True Picture Of Asset Quality
At face value, asset quality among Vietnamese banks has been holding up well despite the economic disruption caused by the
pandemic. The IMF estimates that Vietnam’s NPL ratio stood at 1.87% at end-June 2021, down slightly from 2.00% a year ago (see
chart below). This stability however is likely due to regulatory forbearance and strong credit growth. In 2020, the authorities
introduced Circular 01, which allowed banks to not classify restructured loans as NPLs. More recently, the government further
expanded debt rescheduling for customers in September 2021 under Circular 14. In particular, the SBV had allowed banks to
restructure debt incurred before 1 August 2021, instead of the initial cutoff date of June 10 2020. The deadline for debt repayment
has also been extended. In all, regulatory forbearance on loan classifications are scheduled to only expire in June 2022.
According to the IMF, credit institutions in Vietnam have restructured or rescheduled approximately 3.9% of total outstanding loans
between March and early-November 2020, while about 10.8% of outstanding loans had their interest payments exempted or
reduced. The figures are likely to have been even higher in 2021, which was when the economy was hardest hit by the Delta strain
of Covid-19, culminating in an economic contraction of 6.2% y-o-y in Q321. Indeed, according to the State Bank of Vietnam,

although the bad debt ratio on banks’ balance sheet had been maintained at a low level of 1.9% in 2021, the off-balance sheet bad
debt ratio and unresolved debt sold to the Vietnam Asset Management Company is 3.4%. In a more conservative scenario
where all restructured debt is included, the ratio rises to 7.3%.

Headline NPL Ratio Has Continued To Trend Downwards Despite Pandemic
Vietnam - Non-Performing Loans To Total Gross Loans, %

Source: IMF, Fitch Solutions

Thin capitalisation levels among Vietnamese banks also leaves the banking system vulnerable to economic shocks
and poses a major downside risk to financial stability. As of June 2021, the banking sector’s regulatory capital to risk
weighted assets ratio stood at 11.0% (see chart below), slightly above the minimum regulatory capital adequacy requirement of 9%
prescribed under Circular 22. However, many banks have yet to adopt Basel II requirements, after the authorities extended the
timeline for adoption from 2020 previously to the start of 2023 currently. This limits the comparability of reported capital adequacy
ratios (CARs) against those in other markets. The latest numbers from the IMF suggest that only 18 out of 43 Vietnamese banks
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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Vietnam Banking & Financial Services Report | Q3 2022

(accounting for 60% of total banking system’s assets) met the capital standards required for Basel II adoption in 2019. As more
banks gradually adopt the more stringent Basel II standards – subsequently increasing the base of risk-weighted assets – we believe
that reported CARs will continue to decline.

Capital Adequacy Is Low And Trending Downwards

Vietnam - Regulatory Capital To Risk-Weighted Assets, %

Source: IMF, Fitch Solutions

Strong Growth Rebound Should Provide Respite For Banks
Nevertheless, the economy is still on the mend and we expect the operating environment for banks to improve in 2022. We think
that global economic headwinds from Russia’s invasion of Ukraine and Covid-related lockdowns in China will dent, but not scupper
the economic recovery. Importantly, containment measures have been significantly loosened in recent months, and the country’s
borders have fully reopened. We expect a continued normalisation of economic activities over the coming quarters as the
population is now more resilient to the coronavirus . As of March 22, more than 80% of the population were fully inoculated, and
nearly half have received booster shots. We continue to expect Vietnam’s economic growth to rebound to 6.8% in 2022, from a
multi-decade long low of just 2.6% in 2021.

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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16


Vietnam Banking & Financial Services Report | Q3 2022

Forecast Tables
ASSETS FORECASTS (VIETNAM 2020-2025)
Indicator
Total assets, VNDmn

2020

2021e

2022f

2023f

2024f

2025f

12,061,660,232 13,750,292,665 15,812,836,564 17,947,569,501 20,370,491,383 23,120,507,720

Total assets, USDmn
Total assets, % of GDP
Total assets, % y-o-y
Client loans, VNDmn

521,450

594,093

681,587

780,329

876,904

985,432

191.7

163.7

170.0

174.7

180.5

185.7

12.1

14.0

15.0

13.5

13.5

13.5

9,570,732,801 10,872,352,462 12,503,205,332 14,191,138,052 16,106,941,689 18,281,378,817

Client loans, USDmn

413,762

469,749

538,931

617,006

693,368

779,181

152.1

129.5

134.4

138.1

142.7

146.9

12.2

13.6

15.0

13.5

13.5

13.5

Client loans, USD per capita

4,250

4,785

5,446

6,188

6,905

7,706

Client loans, % of total assets

79.3

79.1

79.1

79.1

79.1

79.1

2027f

2028f

2029f

2030f

2031f

Client loans, % of GDP
Client loans, % y-o-y

Source: IMF, Fitch Solutions

ASSETS FORECASTS (VIETNAM 2026-2031)
Indicator
Total assets, VNDmn

2026f

26,241,776,263 29,784,416,058 33,805,312,226 38,369,029,377 43,548,848,342 49,427,942,869

Total assets, USDmn
Total assets, % of GDP
Total assets, % y-o-y
Client loans, VNDmn

1,107,391

1,244,445

1,398,460

1,571,537

1,766,034

1,984,603

192.0

198.4

205.1

211.9

219.0

226.3

13.5

13.5

13.5

13.5

13.5

13.5

20,749,364,957 23,550,529,226 26,729,850,672 30,338,380,512 34,434,061,882 39,082,660,236

Client loans, USDmn

875,614

983,982

1,105,762

1,242,614

1,396,403

1,569,225

151.8

156.9

162.2

167.6

173.2

178.9

13.5

13.5

13.5

13.5

13.5

13.5

Client loans, USD per capita

8,603

9,606

10,731

11,991

13,405

14,993

Client loans, % of total assets

79.1

79.1

79.1

79.1

79.1

79.1

2021e

2022f

2023f

2024f

2025f

Client loans, % of GDP
Client loans, % y-o-y

Source: IMF, Fitch Solutions

LIABILITIES FORECASTS (VIETNAM 2020-2025)
Indicator

Total liabilities and capital,
VNDmn
Total liabilities and capital,
USDmn
Total liabilities and capital, % of
GDP
Total liabilities and capital, % yo-y
Client deposits, VNDmn
Client deposits, USDmn
Client deposits, % of GDP
Client deposits, % y-o-y

2020

12,061,660,232 13,750,292,665 15,812,836,564 17,947,569,501 20,370,491,383 23,120,507,720
521,450

594,093

681,587

780,329

876,904

985,432

191.7

163.7

170.0

174.7

180.5

185.7

12.1

14.0

15.0

13.5

13.5

13.5

9,543,178,227 10,688,359,614 11,970,962,768 13,407,478,300 15,016,375,696 16,818,340,780
412,570

461,799

515,989

582,933

646,421

716,824

151.6

127.3

128.7

130.5

133.0

135.1

12.0

12.0

12.0

12.0

12.0

12.0

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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17


Vietnam Banking & Financial Services Report | Q3 2022

Indicator

2020

2021e

2022f

2023f

2024f

2025f

Client deposits, USD per capita

4,238

4,704

5,214

5,846

6,437

7,089

79.1

77.7

75.7

74.7

73.7

72.7

2027f

2028f

2029f

2030f

2031f

Client deposits, % of total
liabilities

Source: IMF, Fitch Solutions

LIABILITIES FORECASTS (VIETNAM 2026-2031)
Indicator

2026f

Total liabilities and capital,
VNDmn
Total liabilities and capital,
USDmn

26,241,776,263 29,784,416,058 33,805,312,226 38,369,029,377 43,548,848,342 49,427,942,869
1,107,391

1,244,445

1,398,460

1,571,537

1,766,034

1,984,603

192.0

198.4

205.1

211.9

219.0

226.3

13.5

13.5

13.5

13.5

13.5

13.5

Total liabilities and capital, % of
GDP
Total liabilities and capital, % yo-y
Client deposits, VNDmn

18,836,541,674 21,096,926,675 23,628,557,876 26,463,984,821 29,639,662,999 33,196,422,559

Client deposits, USDmn
Client deposits, % of GDP
Client deposits, % y-o-y
Client deposits, USD per capita

Client deposits, % of total
liabilities

794,893

881,466

977,467

1,083,924

1,201,976

1,332,884

137.8

140.6

143.3

146.2

149.1

152.0

12.0

12.0

12.0

12.0

12.0

12.0

7,810

8,605

9,485

10,460

11,539

12,735

71.8

70.8

69.9

69.0

68.1

67.2

Source: IMF, Fitch Solutions

KEY RATIOS FORECASTS (VIETNAM 2020-2031)
Indicator
Loan/deposit ratio
Loan/asset ratio

2020

2021e

2022f

2023f

2024f

2025f

2026f

2027f

2028f

2029f

2030f

2031f

100.29

101.72

104.45

105.84

107.26

108.70

110.15

111.63

113.13

114.64

116.18

117.73

79.35

79.07

79.07

79.07

79.07

79.07

79.07

79.07

79.07

79.07

79.07

79.07

Source: IMF, Fitch Solutions

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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18

Vietnam Banking & Financial Services Report | Q3 2022

Competitive Landscape
The Vietnamese banking industry is made up of a variety of players, featuring relatively large state-owned and joint-stock
commercial banks to small, privately held banks. The top 10 banks account for 60% of the sector's total assets, with the top four
banks holding around 42% of the asset base..
The State Bank of Vietnam (SBV), which oversees the banking sector, lists four state-owned commercial banks, 31 joint-stock
commercial banks, nine wholly foreign-owned banks, two policy banks and one cooperative bank.

Latest Developments
• In May 2022, the State Bank of Vietnam (SBV) approved an application from the Asia Commercial Joint Stock Bank to
increase its charter capital. The bank will increase its charter capital by the maximum amount of VND6.8bn through the issuance
of new shares.
• In April 2022, the SBV approved the network development of the Joint Stock Commercial Bank for Foreign Trade of
Vietnam (Vietcombank) to establish five new branches in the country.
• In January 2022, US bank Citi announced the sale of its consumer banking franchises in four South East Asian countries,
including Vietnam, to UOB Group. The agreement includes all related Citi staff and an estimated 5,000 consumer bank and
supporting employees are expected to transfer to UOB. The deal is part of Citi’s wider exit from its consumer franchises in 13
markets across Asia and Europe, Middle East and Africa.
• In January 2022, US holding company Vemanti Group announced that it had signed a Letter of Intent with Vietnam Public
Joint-stock Commercial Bank to become one of the first small- and medium-sized enterprise neobanking solutions in
Vietnam. This is a step towards an integrated bilateral formal partnership for the two groups following the announcement of a
memorandum of understanding to create joint financial projects in Q321.
• Vietnam Prosperity Joint Stock Commercial Bank (VPBank) completed the sale of its 49% stake in VPBank Finance
Company (FE Credit) to SMBC Consumer Finance, a wholly owned subsidiary of Japan-based Sumitomo Mitsui Financial
Group. VPBank will retain a 50% stake in FE Credit, while the remaining 1% is held by another investor.
TOP 10 COMMERCIAL AND RETAIL BANKS BY TOTAL ASSETS, VNDMN (2021, 2022)
Total Assets

Joint Stock Commercial Bank for Investment and Development of

Total Common
Equity

Date

1,847,704,400

89,837,700

3/31/2022

Vietnam Joint Stock Commercial Bank for Industry and Trade

1,663,730,200

98,296,400

3/31/2022

Vietnam Bank for Agriculture and Rural Development

1,622,749,649

76,520,621

6/30/2021

Joint Stock Commercial Bank For Foreign Trade of Vietnam

1,462,748,200

117,077,700

3/31/2022

Saigon Joint Stock Commercial Bank

703,155,353

22,535,321

12/31/2021

Military Commercial Joint Stock Bank

649,039,794

67,063,548

3/31/2022

Vietnam Prosperity Joint Stock Commercial Bank

563,923,685

95,202,019

3/31/2022

Asia Commercial Joint Stock Bank

528,636,400

48,203,300

3/31/2022

Saigon Thuong Tin Commercial Joint Stock Bank

521,117,100

34,261,300

12/31/2021

Saigon - Hanoi Commercial Joint Stock Bank

515,553,313

37,818,788

3/31/2022

Vietnam

Note: Data is latest available. Source: Company reports, Fitch Solutions
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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19


Vietnam Banking & Financial Services Report | Q3 2022

The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) has retained the top spot as
measured by total assets, remaining above the other three largest of the top four banks in the country.
BIDV was founded in 1957 as the Bank of Construction for Vietnam but changed its name in 1990. It is primarily state-owned lender
following the government selling a stake in 2012. Beyond traditional banking, BIDV also provides services in insurance, securities
and investments. It operates 190 branches and 855 transaction offices nationwide, with a presence in six countries. The customer
base of BIDV exceeds 7.7mn, representing over 8% of Vietnam's population. In 2019, South Korea's KEB Hana acquired a 15%
stake in BIDV, making it the second largest shareholder.
Edging in the second spot is the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank). The bank was
established in 1988 after being separated from the SBV, which maintains a majority stake of around 65%. The bank also has two
foreign shareholders, the Bank of Tokyo-Mitsubishi UFJ and International Finance Corporation, with the latter recently
reducing its stake from around 8% to 5%.
Vietinbank has 155 branches and more than 950 transaction offices countrywide. The bank is also expanding its international
presence, with branches in Frankfurt and Berlin (Germany), a representative office in Myanmar and a subsidiary in Laos. It also has a
correspondent relationship with 1,000 banks in 90 countries worldwide.
TOP 10 BANKS - ASSET QUALITY (2021, 2022)
Growth of Gross
Loans (%)
Joint Stock Commercial Bank for Investment and

NPL Ratio (%)

Reserves for

NPL Charges

NPLs (% of

(% of gross

NPLs)

loans)

Date

4.7

1.0

259.2

2.2

3/31/2022

8.8

1.3

197.3

1.5

3/31/2022

1.6

2.0

133.5

2.1

6/30/2021

7.1

0.8

372.6

2.2

3/31/2022

Saigon Joint Stock Commercial Bank

2.6

na

na

2.0

12/31/2021

Military Commercial Joint Stock Bank

14.3

1.0

250.1

1.8

3/31/2022

Vietnam Prosperity Joint Stock Commercial Bank

5.4

4.8

63.6

3.8

3/31/2022

Asia Commercial Joint Stock Bank

5.0

0.8

187.8

0.0

3/31/2022

14.0

1.5

118.6

0.4

12/31/2021

2.6

1.7

80.6

0.7

3/31/2022

Development of Vietnam
Vietnam Joint Stock Commercial Bank for Industry
and Trade
Vietnam Bank for Agriculture and Rural
Development
Joint Stock Commercial Bank For Foreign Trade of
Vietnam

Saigon Thuong Tin Commercial Joint Stock Bank
Saigon - Hanoi Commercial Joint Stock Bank

Note: Data is latest available. na = not available. Source: Company reports, Fitch Solutions

The Vietnam Bank for Agriculture and Rural Development (AgriBank) has moved into third position out of the country's top
four banks.
Founded in 1988, AgriBank is Vietnam's only 100% state-owned commercial bank. It offers insurance and brokerage services in
addition to banking. It has a network of more than 2,300 branches and transaction offices across the country. Agribank focuses on
Vietnam's agricultural and rural areas and has a branch in Cambodia. The government plans to launch an initial public offering for
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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20


Vietnam Banking & Financial Services Report | Q3 2022

the bank, converting it into a joint stock bank, but this has not yet occurred.

TOP 10 BANKS - EARNINGS AND PROFITABILITY (2021, 2022)
Net Interest

Expenses (%

Operating
Profit (% of

Net Income

Income (% of

of gross

earning assets)

revenues)

3.0

26.7

1.0

16.8

3/31/2022

2.7

26.9

1.5

19.9

3/31/2022

3.8

34.5

1.3

21.7

6/30/2021

3.6

27.0

2.8

28.3

3/31/2022

Saigon Joint Stock Commercial Bank

2.0

39.3

0.2

5.7

12/31/2021

Military Commercial Joint Stock Bank

5.7

31.7

3.8

29.6

3/31/2022

Vietnam Prosperity Joint Stock Commercial Bank

8.0

16.7

8.1

39.8

3/31/2022

Asia Commercial Joint Stock Bank

4.5

39.9

3.2

28.6

3/31/2022

Saigon Thuong Tin Commercial Joint Stock Bank

2.7

56.5

0.8

10.9

12/31/2021

Saigon - Hanoi Commercial Joint Stock Bank

3.7

21.3

2.6

28.6

3/31/2022

Joint Stock Commercial Bank for Investment and
Development of Vietnam
Vietnam Joint Stock Commercial Bank for Industry
and Trade
Vietnam Bank for Agriculture and Rural
Development
Joint Stock Commercial Bank For Foreign Trade of
Vietnam

average
assets)

(% of average

Date

equity)

Note: Data is latest available. Source: Company reports, Fitch Solutions

Vietcombank holds steady at in fourth position. Established in 1963, is the oldest commercial bank for external affairs in Vietnam. It
was the first bank in the country to have a centralised capital management structure and was the first commercial bank in the
country to deal in foreign currencies. Vietcombank has been listed on the Ho Chi Minh stock exchange since 2009, though the SBV
retains a 74.8% stake. Japan's Mizuho Corporate Bank acquired a 15.0% holding in January 2012 and has maintained that share.
Singapore's GIC owns a 2.5% share.
The bank has more than 15,000 employees and over 550 branches and transaction offices across the country with a number of
subsidiaries offering non-banking financial services. Vietcombank has a banking subsidiary in Laos and several joint ventures. The
bank has expanded its presence beyond the region, opening a branch in Australia and a representative office in the US.

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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21


Vietnam Banking & Financial Services Report | Q3 2022

TOP 10 BANKS - CAPITAL AND LEVERAGE (2021, 2022)
Tangible Common

Net Income Minus

Equity (% of tangible

Cash Dividends (%

assets)

of total equity)

4.6

17.1

3/31/2022

Vietnam Joint Stock Commercial Bank for Industry and Trade

5.7

20.3

3/31/2022

Vietnam Bank for Agriculture and Rural Development

4.6

22.2

6/30/2021

Joint Stock Commercial Bank For Foreign Trade of Vietnam

7.8

29.1

3/31/2022

Saigon Joint Stock Commercial Bank

2.9

6.9

12/31/2021

Military Commercial Joint Stock Bank

10.1

30.7

3/31/2022

Vietnam Prosperity Joint Stock Commercial Bank

16.8

41.8

3/31/2022

Asia Commercial Joint Stock Bank

8.9

29.7

3/31/2022

Saigon Thuong Tin Commercial Joint Stock Bank

5.8

11.8

12/31/2021

Saigon - Hanoi Commercial Joint Stock Bank

6.5

29.5

3/31/2022

Joint Stock Commercial Bank for Investment and Development of
Vietnam

Date

Note: Data is latest available. Source: Company reports, Fitch Solutions

Saigon Joint Stock Commercial Bank (SCB) was established in 1992 and is the country's fifth largest bank in terms of assets. It
is much smaller than fourth-ranked Vietcombank, having just over 5% of the country’s total banking assets. SCB focuses on retail
and commercial banking services but also engages in asset management, gold trading, bond dealing and insurance, the latter via a

tie-up with Manulife. Its network includes 50 branches and 189 transaction offices across the country and it has more than 7,700
employees. SCB has two subsidiaries in hotel and travel services and another in credit information services.

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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22


Vietnam Banking & Financial Services Report | Q3 2022

TOP 10 BANKS - FUNDING AND LIQUIDITY (2021, 2022)
Loans (% of
customer
deposits)
Joint Stock Commercial Bank for Investment and

Interbank
Assets (% of
interbank
liabilities)

Customer
Deposits (% of

Date

total funding)

101.5

184.3

81.2

3/31/2022

101.4

199.3

79.3

3/31/2022

Vietnam Bank for Agriculture and Rural Development

84.3

5,119.3

96.9

6/30/2021

Joint Stock Commercial Bank For Foreign Trade of Vietnam

87.2

258.0

89.7

3/31/2022

Saigon Joint Stock Commercial Bank

70.4

105.6

77.7

12/31/2021

Military Commercial Joint Stock Bank

106.5

119.6

70.9

3/31/2022

Vietnam Prosperity Joint Stock Commercial Bank

136.6

133.9

60.1

3/31/2022

Asia Commercial Joint Stock Bank

98.4

161.1

83.7

3/31/2022

Saigon Thuong Tin Commercial Joint Stock Bank

90.8

90.9

92.0

12/31/2021

111.4

85.0

71.7

3/31/2022

Development of Vietnam
Vietnam Joint Stock Commercial Bank for Industry and
Trade

Saigon - Hanoi Commercial Joint Stock Bank
Note: Data is latest available. Source: Company reports, Fitch Solutions

The remaining five banks that make up the top 10 are: Military Commercial Joint Stock Bank, Vietnam Prosperity Joint
Stock Commercial Bank, Asia Commercial Joint Stock Bank, Saigon Thuong Tin Commercial Joint Stock Bank
and Saigon - Hanoi Commercial Joint Stock Bank.
They each hold total assets of VND650mn or less, a much smaller asset base than the top four banks.

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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23


Vietnam Banking & Financial Services Report | Q3 2022

Regulatory Environment
The State Bank of Vietnam (SBV) is the central bank and oversees all banking and credit institutions in Vietnam. The SBV is not a
wholly independent central bank, despite passage of the State Bank Law in 2010 that nominally expanded its independence. Some

key areas of operation, such as the provision of liquidity support, monetary policy, the management of foreign currency reserves,
foreign exchange rates and issuance of banking licenses, are subject to legislative approval or consultation.
To provide support during the Covid-19 crisis, the SBV allowed banks to reschedule or reduce fees and interest rates to encourage
payment. Customers were permitted to restructure repayments over 12 months and would not lose their debt classification status
prior to the restructuring agreement. In September 2021, the central bank announced the following additional support measures:
• Financial institutions were allowed to reschedule debts incurred before August 1 2020, compared with June 10 2020 previously.
• The date for debts with repayment obligations was extended to run through June 30 2022, instead of the prior deadline of
December 31 2020.
• Repayment terms for customers were lengthened to June 20 2022 while the time limit for overdue debts incurred was extended
to include those incurred through September 7 2021.
• Credit institutions and foreign bank branches were permitted to determine the level of fees and interest rates for debts incurred
before August 1 2021 with repayment obligation between January 23 2020 and June 30 2022, and for customers unable to
repay debts due to the pandemic.
In August 2018, the government issued its long-term plan for the industry, via the 'Development Strategy for the Banking Sector to
2025, with Orientations to 2030'. The strategy includes plans to make the SBV more autonomous, independent and accountable,
while also increasing the effectiveness of its supervision. It also includes the gradual adoption of Basel II standards by local banks,
the diversification of bank ownership structures, a goal to have several leading entities included among the top 100 banks in Asia
(by assets) by 2025. In addition, there are plans to develop the micro-financing sub-sector and promoting the development of noncash payments in Vietnam. The strategy will be supported by the World Bank and Swiss government under the ‘Vietnam:
Strengthening Banking Sector Soundness and Development Project’.
The primary legislation governing the banking sector is the 2010 Law on Credit Institutions, which was later amended in 2018. The
newer amendments focused primarily on establishing a framework for the restructuring, rescue and liquidation of a credit
institution. It also clamped down on cross-ownership of credit institutions. More specific rules and requirements are predominately
outlined in government decrees or circulars.

THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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24

Vietnam Banking & Financial Services Report | Q3 2022

Insurance
Insurance Snapshot
Key View: Vietnam's insurance market has enormous growth potential given the country's large population and a low rate of
penetration. There are a number of structural factors in place that are supportive of continued rapid growth of the dominant life
segment, including a young population, urbanisation, an expanding middle class, the absence of a comprehensive social security
system, high savings rates among households that can afford to, and innovation by multinational life insurance companies who
consider Vietnam's market to be a growth opportunity. The smaller non-life segment also maintains development prospects,
although unlike the life segment, the already competitive landscape is dominated by indigenous insurers, many of which have
traditionally been linked with large SOEs. We also note that the emergence of new insurtech platforms across both segments will
make it easy for first-time customers to buy insurance and encourage innovations in the types of coverage that individuals and
businesses can afford.

Sustainable Rate Of Growth To Continue Over The Long Term
Vietnam - Insurance Premiums By Sector (2020-2031)

e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions

Latest Trends And Developments
• We forecast total insurance premium growth to ease slightly to 13.0% in 2022 from 17.0% in 2021. Growth in the larger life
segment will marginally outpace that across Vietnam's non-life lines.
• We expect life insurance premiums to rise from VND168.7trn in 2022 to VND267.0trn in 2026, at an average annual rate of
about 12.3%, up from the 11.3% previously forecast last quarter. In US dollar terms, premiums will rise from USD7.47bn to
USD11.27bn over the same period, as Vietnam's economy continues its recovery and incomes increase.
• We expect total non-life premiums to increase from VND77.2trn in 2022 to VND117.8trn in 2026. Average annual growth is
forecast to be 11.5%, which is slightly lower than the life market. In US dollar terms, premiums will increase from USD3.42bn to
USD4.97bn.

• The government’s new economic restructuring plan for 2021-2025 sets two key goals for the expansion of the country’s
insurance sector. First, it aims for 15% of the population to be covered by life insurance by 2025 compared with around 11% in
2020. Second, premium revenue is targeted at 3.5% of GDP by 2025 – it is estimated to be about 3.3% in 2021.
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

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