1

Retail banking: competing by technology, advancing to regional integration

Madame Nguyn Th Nga Chairman of SEABANK

SEABANK - Finance Session

Speech outlines

Vietnam Banking 2012 at a glance Retail banking: What makes a transformation?

Issues & recommendations:

Non-cash payment

Access to bank accounts

SME financing Open discussion

SEABANK - Finance Session

Vietnam Banking 2012 at a glance

7 top achievements in macro governance
1. Inflation restricted at 6.81% 2. Forex market stabilised, FYC reserve increased 3. Lending interest rate largely bended to fit in businesses capital absorbability 4. VND value appreciated due to anti-dollar & anti-gold policies
Vietnam's banks see rising assets in 2012 Source: SBV (as of Nov2012)
Assets Total assets Assets increment whole system $233bio $3.2bio (1.4%)

5. Industry inspection activities better

disciplined for transparency 6. Industry restructuring execution better undergoing 7. Quality of credit recognised by SME, despite low credit growth

Assets increment SOC banks

Assets increment - JSC banks Equity Total equity YOY increased equity

$1.3bio
$1.2bio

$20bio 7.89%

JSC equity
Charter capital Total capital increase

$452mio

9.68%

SEABANK - Finance Session

Vietnam financial market background

The financial services industry continues to undergo rapid and complex changes in Vietnam. Beyond the rapidly evolving economic landscape, these changes are also driven by advances in technology,
Banking Vietnam 2012 Conference (Hanoi, May 2012)

changing customer needs and adjustments to regulation

SEABANK - Finance Session

Issues

Things that matter

Economic restructuring Industry regulatory adjustments Consumer trends Technology advances Complicated fraud Unbalanced network distribution ASEAN integration framework

What to be addressed
1. Non-cash payment 2. Access to bank accounts 3. SME financing

SEABANK - Finance Session

Non-cash payment

Backgrounds
Banks advancing to product diversification due to technology advances Awareness to Usage: conversion rate still low Security concerns arising among users Prime Minister approval: 20112015 Non-cash payment promotion

Recommendations
1. Stronger policies & regulations applied to all sectors 2. Technology infrastructure to be enhanced 3. Convergent Payment Advisory Model 4. Cross-border tools to be established

SEABANK - Finance Session

Access to bank accounts

Backgrounds
Only 20% population with bank accounts Network & facility distribution only grouped in urban areas Cash payment culture E-commerce popular, yet, only purchase orders counted

Recommendations
Banking facilities in rural areas to be more invested Online payment regulations for related parties Non-cash payment regulation: More universal execution needed

SEABANK - Finance Session

SME financing: Whats in it for SMEs?

Government

Lending rate cap offer Gov guarantee for capital access Defer VAT tax payment Waiver on income tax, other fees, charges Extra fund pumped for banks financing SME

SEABANK

Own source of fund: >2,000bioVND in 2012 New approach: Total banking relationship Product portfolio: working capital, daily banking Credit risk control: Convergence model

SEABANK - Finance Session

Capital access for SME: What needs addressed?

Issues from SMEs Recommendations

Financial transparency: Low Corporate governance: Weak Collateral creditability: Unstable

Stronger policies to clear the cloud Cash flow management enhancement

Risk control police for collateral Non-cash payment infrastructure

10

Cash payment: High

SEABANK - Finance Session

Summary

Issues
Non-cash payment/Crossborder payment

Recommendations
Adjustments to regulations: stricter and more comprehensive execution

Access to bank accounts

SME financing

Technology infrastructure: More invested

Rural banking facilities: More invested Risk control on cross-border payment:

Convergence model
SME financial transparency: More auditing regulations to be established

SEABANK - Finance Session

11

Appendix Vietnam economic outlook 2013

What Vietnam economic situation will be like in 2013 and more

PHAM CHI LAN, Economist: Classification of insolvent enterprises for tailored resolutions. Resolutions in focus: -Economic restructuring to be accelerated -Insolvent equity liquidation better than capital bailout

LE DANG DOANH, Economist: Recoverage of market confidence is key. Resolutions in focus: -Industry restructuring to be better executed -More realistic policies to be designed

Mr CAO SY KIEM, former SBV Governor: Stricter execution towards applied policies.

Resolutions in focus: -Bad debts -Real estate standstill -Commodity inventory

NGUYEN DUC THANH, Lecturer: Administrative measures to dominate market-oriented measures. Resolutions in focus: -Prudent policy in interest rate -Realistic Monetary policy to rise local business competition capability
SEABANK - Finance Session 12