CBA rapidly makes big market impression

Danny Armstrong

Three years after officially operating in Ho Chi Minh City, Commonwealth Bank of Australia (CBA) has a strong foothold in Vietnam and is planning to expand its presence in this country. CBA Vietnam’s CEO Danny Armstrong tells VIR about the bank’s expansion plans in Vietnam.

How about the business operations of CBA in Vietnam during 2010? Do you consider the current tightened monetary policy of the government a hindrance to foreign banks in Vietnam?

We support government initiatives to stabilise the local economy and believe the government is taking appropriate action.

A stable economy supports economic growth and with strong growth, banks can support the population and local businesses to borrow, save, remit and transact. We believe there is sufficient growth and demand for financial services for all Vietnamese banks, whether local or foreign, to operate successfully and profitably in this market.

Our operations in Vietnam have achieved some significant outcomes which reflect our healthy growth in this young and dynamic financial market.

In less than a year we have installed ATMs in strategic locations around Ho Chi Minh City to provide our customers with comfortable and safe access to their money. We have also joined the Vietnam Bank Card ATM network, allowing our card holders to withdraw money at more than 1,800 ATMs across Vietnam - free of charge.

In terms of business growth, in the past 12 months we have achieved a significant growth in overall business performance.

Foreign banks like HSBC, Standard Chartered Bank and ANZ are escalating their presence in Vietnam. Will CBA expand its branch network in Vietnam to compete with other banks in this market?

Vietnam has one of the highest economic growth rates in Asia and the banking industry is following the trend with increasing growth in demand for financial services. With a large population of 86 million people and a banking penetration of only 15 per cent, there are enormous growth opportunities in financial services for both local and foreign banks.

Our focus in the short to medium-term is to leverage the strength, knowledge and banking expertise that we have in the Australian market to grow our products, services and our banking operations in Ho Chi Minh City. Longer-term we may consider branch expansion into other cities, but for now we are focused on growing our ATM network and other traditional key product portfolio.

CBA is focusing on supporting small- and medium-sized enterprises (SMEs) in Vietnam. How does CBA support those enterprises given the Vietnamese government’s tightened monetary policy? What about the interest rate policy at CBA in Vietnam?

Like any bank in Vietnam, the Commonwealth Bank must operate under the same operating conditions and under the same policies as any other local or foreign bank.  Our commitment to SMEs in Vietnam is to consistently maintain competitive pricing, deliver high standards of service and to work with our clients to provide sound advice on their capital, lending and banking requirements.

CBA Vietnam takes into account a number of factors when setting rates for interest rate products. In general terms, rates are assessed by weighing up the following factors. Firstly, interest rates set in the wholesale or interbank market.

Secondly, interest rates set by a range of competing banks in Vietnam, taking into account the tenor and risk of the product and in the case of deposits, the credit rating of the bank and finally the needs and requirements of our clients. Upon assessing the above factors we then take a balanced approach in setting rates to deliver reasonable and competitive outcomes for our customers.

Consumer lending is also one of the key services CBA is focusing on in Vietnam, but banking currently has low penetration. Only 15 per cent of Vietnam’s population use banking services. So how will CBA expand its consumer lending business in this market? What target segment will CBA focus on?

Vietnam is a rapidly growing economy with one of the highest economic growth rates in Asia, third to China and India. It has a large and young population, 70 per cent under 26 years of age, rising household incomes, increasing urbanisation and the population is under-banked and under-insured.

Our target market is the young, well educated, modern and emerging population of Vietnam that are looking for secure, affordable and a service focused banking solution for their personal or business requirements. In most cases, our customers also have family or business linkages to Australia.