Bangkok Bank (BBL) has kept a tight rein on its Vietnam operations to guard against souring loans amid the country's economic uncertainties.
Tharabodee: Focus on corporate customers
Thailand's largest lender by assets has remained focused on large corporate customers from Vietnam, Thailand and other countries in Asia, said Tharabodee Serng-Adichaiwit, general manager of BBL's Vietnamese operations.
Its main targets are Vietnamese companies that are business partners or part of the supply chain of Thai corporate companies.
Investors from Japan, Singapore, Taiwan and China are BBL's major customers in Vietnam.
Thai customers represent the largest proportion, accounting for more than 40% of the Vietnam operation's loan portfolio, followed by other Asian investors at around 30-40%, and locals making up the rest.
BBL has operations in 13 countries across the globe with 27 international branches.
It has two branches in Vietnam, in Ho Chi Minh City and Hanoi under a 99-year licence from Vietnam authority.
BBL started its Ho Chi Minh City operation in 1961.
For the first eight months, BBL achieved its loan growth target in Vietnam of 10%, driven by offshore lending, while its onshore loans recorded flat growth due in part to the Vietnamese central bank's tough regulations to curb bad loans as well as economic uncertainties.
The non-performing loans (NPLs) of its two Vietnamese branches totalled 2% of outstanding loans.
Competition in Vietnam's banking industry is fierce with 90 banks, 50 of which are foreign.
Five are local banks fully owned by foreigners, another five are state-owned and the remaining 30 are joint-stock commercial banks.
Mr Tharabodee said Vietnam's economy, banking industry and currency had continued to improve after the 2012 bubble burst following the dong's devaluation.
Vietnam's banking sector NPLs dropped from 8% to 4% in the past two years after the state-owned Vietnam Asset Management was tasked with handling distressed loans.
The State Bank of Vietnam's strong regulations are another key factor leading to the banking system's recovery.
Loan growth of banks in Vietnam is expected to be 12-13% based on the country’s GDP growth, which is estimated at 4-5%.
However, the industry booked loan growth of only 4% for the January-August period.
Vietnam’s GDP growth is expected to be 6-7% annually over the next three to five years based on the assumption of strong foreign direction investment, a stable exchange rate and a pickup in the banking sector.
BBL shares closed Friday on the Stock Exchange of Thailand at 208 baht, down one baht, in heavy trade worth 1.86 billion baht.