Standard Chartered remains upbeat on retail banking

Namita Lal, director in charge of Standard Chartered Bank's retail banking field recently gave a prediction on the potentiality of Vietnam's retail banking market in the near future in the following interview.

What do you evaluate on the growth prospect of the retail banking service in Viet Nam?

In next five years, it is likely that the country's retail banking service will grow sharply and rapidly. In terms of asset management service, its growth will exceed 30-35% because more and more individuals small to medium sized enterprises have opened bank accounts. They required us to provide services of lending or cash management.

As for the consumer lending service, the growth rate could be higher at about 40% this year that will facilitate the development of local economy, production and consumption because production and consumption have a very close relationship.

Lending for small to medium sized banks also is at high potential and needed to undergo a better organisation. Our bank, Standard Chartered will use the best experiences and norms that we gained to promote the lending growth for SMEs in Viet Nam.

Are you too optimistic as forecasting that Vietnam's consumer lending growth will be 40% while the country's increasing inflation makes reduction in people's real income and capital cost rises due to high interest rate?

There are two problems here. Firstly, economic growth in theory is enclosed with lending growth for consumers. We see that Vietnam's economic growth is always high because it is only a small market. If being compared with regional countries such as Singapore and Malaysia, Vietnam's market scope is inconsiderable. Secondly, in any context, money-lending activities often are very brisk. If cannot borrow bank loans, consumers will ask for another supply (from friends, relatives, non-official lending services). Therefore, our bank decided to boost organised lending services to customers. Factually, unorganised lending services will carry a very high interest rate. In my opinion, in the current condition, the Vietnamese government is making big efforts to apply monetary tightening up policies to reduce the credit and monetary supply in the domestic market. We understood that the policies are short-term, but in medium term of 2-3 years, the situation is expected to be more optimistic and positive. With a young population and the increasing income, Vietnam is a highly potential market for us to develop retail-banking services.

In Viet Nam, SMEs now still have to face difficulties in accessing bank loans. What do you think about this?

As the banking system is growing, more SMEs will open accounts at banks, which will create better conditions for them to access credit supplies [bank loans]. Thus, I think that in next 2-3 years, more and more SMEs will pay salary to employees via bank accounts whereby these enterprises can reach our loans more easily through banking transactions. Moreover, when Vietnamese firms set up business relationship with global companies, they will likely have to comply with financial regulations more seriously. By that time, they will need to use more professional services including cash management. Such development prospects will help promote growth of SMEs that now accounts for a large number in Vietnam and provide vocation opportunities for locals. Higher development of SMEs will be good for Vietnamese economy.

Does SC offer preferential interest rates as lending to SMEs? Can you please tell SC's advantages in comparison with other banks?

Factually, our lending rate for SMEs is the same to individuals. The difference is that we offer a progressive interest rate at 5% highest for SMEs that have demand to open business accounts at SC. In addition, we also provide services of manganing business relationship, financial report and credit books of SMEs. So we have two advantages of worldwide network and high service quality when introducing retail-banking products to consumers and SMEs. These mainly make us different from competitors in Asia and other regions of Middle East and Africa as well. Furthermore, SC also supplies other services of financial consultancy for individuals and management service to SMEs through sending qualified experts and managers who have undergone training courses in Vietnam and overseas.

Whether will SC lend to stock and real estate investors with high interest rate?

Current lending rate is not beneficial for them [stock and real estate investors] to borrow bank loans to invest in those fields. They can use other services such as instalment lending for buying a home. I think that in any time, borrowing bank loans to buy property is not advisable. Capital pumped into property investment should be sourced from savings only.

SC's latest report also lowered the forecast on Viet Nam's economic growth within this year. Does SC see potential difficulties as expanding business in Viet Nam?

Right, we lowered the forecast on Vietnam's economic growth down to 6.7-7% but the rate remains high. With this, Viet Nam still is one of the fattest growers in the region. Moreover, economic difficulties happen not only in Vietnam but also in other countries. Meanwhile, other advantages such as population, FDI inflow and overseas remittance all are increasing. It is concluded that the difficulties are in short-term only. So, in next 3-5 years, Vietnam's economy is still very satisfactory. With our expansion plan, we will continue developing with such a growth.

On June 18, SC announced that it would officially launch retail banking services for individuals and SMEs in Hanoi on July 1, 2008 with the dong/US dollar forex rate being maintained at new amplitude. What is your comment on results SC achieved after launching retail-banking market in HCM City?

We have started to introduce retail-banking services for consumers and SMEs in HCM City since June 27, 2007 and gained results exceeding our expectation. Particularly, up to now, we have attracted 2,000 individual customers and SMEs. Products like balance deposit, multi-foreign currency saving programme, and business service package are very favourite for individuals, SMEs and Viet Kieu (overseas Vietnamese) as well. From this, we have extended partnership with many banks and branches in other nations such as Singapore, Malaysia and Korea. (TBKTVN)