Mr. Godfrey Swain, Retail Manager at VIB Vietnam, spoke with VET about the retail banking sector and how to best use retail banking services.
Credit granted in retail banking now accounts for about 5.6 per cent of total credit, with growth of almost 20 per cent per year. What factors are behind the increase in spending and therefore the development of retail banking services?
Credit growth in Vietnam in recent times has been considerably lower compared to previously. Vietnam is heading towards a new year with a better economic situation: low inflation, businesses are developing, many jobs have been created, and economic growth and foreign direct investment (FDI) are high.
All of these factors bring confidence to consumers about the future. Consumption therefore increases, especially in the context of the real estate market being more active and having better prospects compared to previous years. This results in retail banking services increasing significantly.
The only concern for customers when taking out a loan from a bank is repayment capacity and the choice of bank. In order to support customers in creating a repayment plan, banks need to be transparent and clear about the process and policies and apply suitable policies and interest rates.
This is what VIB is doing with customers - being transparent and treating them equally, offering the most attractive borrowing costs, and ensuring that customers have the capacity to repay their loans.
What do you predict for retail banking in the future?
According to a report issued earlier this year by the World Bank (WB), about 31 per cent of adults in Vietnam have a bank account but in rural areas this is only 19 per cent. The ratio is expected to increase significantly in the time to come. Personal incomes are also rising, so demand for credit will be higher.
When demand for credit is met by appropriate channels, the economy will develop and living standards will improve. To achieve this the role of the banking sector is very important. Banks needs to work based on their own principles to win customer trust. This is something VIB is always proud of.
Belief, discipline, and transparency are the main factors in the development of VIB because we are aware that a bank must be a place where customers feel secure and receive the best consultancy.
We are also trying to bring customers the best services at competitive cost.
Vietnam’s population is very young so the country’s banking sector has a great of potential.
The end of year and the Tet holiday are times when individuals and enterprises increase their consumption and business activities. Given that Vietnam’s economy will grow about 6.2 per cent - the highest in the last four years, inflation is expected be lower than 2 per cent - the lowest in the last ten years, and interest rates remain stable and lower than in recent years, do you think that people spending more via credit is an appropriate decision?
Personally, I think that if people have actual demand then they should borrow. Based on my personal experience, as long as I borrow and invest wisely and choose the right bank, borrowing is the right decision. The more important thing is that customers understand the purpose of borrowing.
Borrowing to buy a house is, for me, a great reason to borrow as it improves your living standards and is a good financial plan, because you have to have discipline on spending to make sure that you have the ability to make repayments.
Real estate is also a source of investment and saving. Even though you have to pay interest on the borrowings you create an asset that is with you your whole life.
Real estate is increasing in value, at a rate even higher than inflation. Buying a house as an investment is also considered saving, as long as you have the income to cover both the principal and the interest.
If you wish to buy a car, as long as you have the ability to repay you can borrow. I personally encourage borrowing to improve living standards. In other words, borrow when you have actual demand.