CONTENT

Vietnam Financial market Overview 2006

1 summary

2 Critical reflection

3 further research

4 conclusion
1 summary
2 years after “DOI MOI”, two State-owned
commercial banks were established so that
“SBV could specialize in the monetary policy
and financial supervision as the central bank”.

1988 1991

Private sector is allowed to set up

joint-stock commercial bank.
 Foreign banks are allowed to open
local branches

1992 2000

DAF – Development Assistant Fund

was added to State-owned
financial facilities
PENETRATION TO GDP

% GDP
Bank Deposits

35% Stock market

Insurance
59%
market
2% OTHERS
4%

DEPEND HEAVILY ON BANKING STOCK MARKET, INSURANCE MARKET

AND OTHERS : SLOWLY DEVELOP
SECTOR
the Insurance industry
In 2001, the new Insurance Law:
Foreign joint venture insurance
companies
Wholly foreign owned subsidiary branches

problems:
• Creeping inflation
• Regulatory, supervisory framework for
the industry is immature
• Capital market develop too slow
the Insurance industry
Life
Life Non-life
insurance/
insurance insurance
non-life
(%/GDP) (%/GDP)
insurance
2002 0.82 0.49 1.62
2004 1.07 0.66 1.67
life-insurance market is larger share than
nonlife-insurance one.
 The Banking industry
banking sector is financially weak:

the reinforcement of
non- shareholders’ equity
performing capital took place
powerfully,
loans (NPLs): non-commercial
15% total based lending
supporting more
credit (8% capital for banks

positive factors:
GDP) the competition of
foreign banks
the stock market
• 30
companies with market
capitalization of $371 million.

Other institution investors, pension

fund

• One Investment fund listed

• One pension fund
 2 Critical reflection

“Vietnam’s financial system

depended heavily on the Conclusion:
SBV and two SOCBs, which loans from
provided almost all financial financial
services in the country” intermediaries
dominating the
• “The Economics of
Vietnam financial
Money, Banking, and market is not
Financial Markets” serious
• “Financial Systems,
Corporate Finance, and
Economic Development”
The Banking industry

NPLs rate:
S&P Ratings 3.3% total
Services: Banking
Industry Country credits
Risk Assessment
(BICRA) on
Vietnam to high risk of
group '10’ poor liquidity
the Insurance industry

Life
Life Non-life
insurance/
insurance insurance
non-life
(%/GDP) (%/GDP)
insurance
2002 0.82 0.49 1.62
2004 1.07 0.66 1.67
2010 0.77% 0.93% 0.82
Other institution investors, pension
fund

the number of
decreased averagely
investment funds is
29% NAV
approximately 400

private sector workers

can participate in
pension insurance
 3 Further research

Changes Most of state-owned commercial

have
occurred
banks are equitized
in
Vietnam
financial The stock market has developed
market : rapidly, valued VND 643,395 trillion
(32.5% GDP).
> 400 investment funds operating
in Vietnam.
 4 conclusion

Vietnam financial system revealed

many weaknesses

Asian Development Bank,

Nguyen Thi Quy, Economic Technical Assistance Report:
Research Center, Graduate School
of Economics Nagoya University:
‘Socialist Republic of Viet
Nam:Support for
‘Developing Vietnam’s
financial market: Using Developing Capital
Markets and Building
examples from Japanese
Capacity in the Financial
experience’
Sector’
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