Taiwanese Banks Profitable in Vietnam due to Wide Interest Margin

Taipei, Dec. 13, 2012 (CENS)--Thanks to wide interest margin, Taiwanese banks in Vietnam are all profitable, said Y. F. Chan, president of Indovina Bank Ltd., Cathay United Bank's joint venture in Vietnam.

A private Taiwanese bank, Cathay United purchased a 50% stake in Indovina in 2000, which has grown rapidly to have 35 footholds in Vietnam.

Chan indicated that the interest rate on Vietnamese dong deposits is over 9% per annum, and 4%-6% for U.S. dollars, hence being relatively higher than those in Taiwan and many other countries.

So far eight Taiwanese banks have established footholds in Vietnam, including Cathay United, Taipei Fubon Commercial Bank, Mega International Commercial Bank, Chinatrust Commercial Bank, Hua Nan Bank, First Commercial Bank, Bank SinoPac, and Shanghai Commercial & Savings Bank (SCSB).

Cathay United has a branch in Chu Lai and a 50% stake in Indovina, and Taipei Fubon has taken over the three branches and sub-branches from ChinFon Commercial Bank, the first Taiwanese bank in Vietnam in 1993 that auctioned its operations there to Taipei Fubon in 2009.

Chan said that Vietnam is an aggressively developing country experiencing rapid economic growth, particularly in recent years, which has fueled demand for financial services. Over the last 10 years the country saw the number of bank accounts skyrocket to 20 million from 300,000, in addition to a sharp annual rise of 40%-50% in loans.

Excluding Hong Kong and China, Vietnam is Cathay United's most profitable overseas foothold. Last year Indovina posted after-tax profits of US$27 million, surging from the corresponding US$1 million recorded in 2003.