2014年-世界发展银行全球_Financial_Sector_Assessment___Vietnam_28页_1mb

Vietnam Financial Sector Assessment Summary (June 2014)

I. Introduction and Main Recommendations

Vietnam has made significant economic progress since the 1986 ĐOI Mói reforms, achieving an average GDP growth of over 7% annually since 1990 and tripling per capita income. However, recent years have seen signs of corporate and financial distress, including high levels of non-performing loans (NPLs) and over-leveraged state-owned enterprises (SOEs). The financial sector's weak performance is attributed to institutional and regulatory issues such as SOE and bank interference, poor governance, connected lending, and inadequate financial infrastructure.

The Financial Sector Assessment Program (FSAP) recommends a three-phase reform program:

• First Phase: Address pre-conditions for successful reform, including financial audits and identifying interconnectedness.
• Second Phase: Implement immediate measures such as NPL resolution, recapitalization of banks, and SOE share divestment.
• Third Phase: Deepen reforms in capital markets, financial infrastructure, and regulation.

The recommendations include:

• Recapitalization plans for banks.
• A comprehensive NPL workout program.
• Regulatory reforms and the strengthening of the financial safety net.
• Measures to improve financial data quality and transparency.

II. Structure of the Financial System

Vietnam's financial system is large relative to its low-middle-income status, with assets reaching 200% of GDP in 2011. The banking sector dominates, holding 183% of GDP in assets and 92% of total financial institution assets. Bank deposits and credit to GDP have grown significantly, with credit growth peaking at 54% annually in 2007 due to WTO accession. However, recent credit growth has been erratic, with sharp slowdowns and spikes, and the sector has faced liquidity and solvency issues.

Non-banking financial institutions and securities markets remain small:

• Non-banking financial institutions (including cooperatives) account for 17% of GDP and 8% of financial institution assets.
• Insurance companies account for 4% of GDP, while mutual funds and private pension funds are negligible.
• The equity market has 700 listed companies, many of which are SOEs, but market capitalization remains low at 20% of GDP, indicating a lack of depth and liquidity.

III. Banking Sector Structure and Performance

The banking sector is heavily influenced by state ownership:

• Five state-owned commercial banks (SOCBs) accounted for 40% of assets and 48% of deposits in 2011.
• State participation in joint-stock banks (JSBs) is significant, with some SOEs and SCOBs holding equity in JSBs.
• Cross-ownership between banks and enterprises raises concerns about conflicts of interest and related-party lending.

Bank performance has deteriorated:

• The average ROA of all banks fell from 1.8% in 2007 to 0.5% in 2012.
• NPLs reached 12% of total loans, with poor data quality potentially overstating the figures.
• Stress tests reveal high exposure to credit and concentration risks.

The listed corporate sector shows similar vulnerabilities:

• Many sectors, especially construction, real estate, and utilities, are underperforming.
• SOEs, despite being a significant part of the equity market, are more distressed than private firms due to weak financial health and over-leveraging.

IV. Capital Market Development

A. Securities Markets

The fixed-income market is moderate in size, dominated by government bonds:

• Government bonds account for 90% of the market, with an outstanding value of 15% of GDP.
• Corporate fixed-income markets are still in early stages, with limited development.

The equity market is large in terms of number of listings but small in capitalization:

• Two exchanges (HSX and HNX) list 700 companies, with many being SOEs.
• Market capitalization is 20% of GDP, lower than comparable East Asian markets.
• The UpCom platform provides a venue for non-listed public companies, but many public companies still trade outside regulated markets.

B. Institutional Investors

• The mutual fund industry is small but shows growth potential, with new open-ended funds introduced in 2013.
• The insurance sector is dominated by non-life insurance, particularly motor third-party liability (MTPL) insurance.
• Premium rates and provisions do not reflect underlying risks, and there is a need for risk-based pricing and fraud prevention.
• Bancassurance has potential to expand insurance access, but requires careful regulation to prevent overreach by banks.
• The Social Security Fund (SSF) holds significant assets (6.5% of GDP) but is not actively investing in capital markets. It should consider a liability-driven investment policy once the banking sector is restructured.

V. Financial Inclusion

Vietnam has made progress in financial inclusion, particularly for SMEs and low-income individuals, but challenges remain:

• Credit account penetration is higher than many comparators, but data may overstate access.
• Collateral requirements for SME lending are high (218% of collateral-to-loan ratio), limiting access.
• Deposit account penetration is lower than international benchmarks.
• Insurance coverage is limited, with the agriculture insurance program still in pilot phase.

Key reforms to improve financial inclusion include:

• Strengthening financial infrastructure, such as accounting standards and credit reporting.
• Revising the SME Guarantee Fund to improve outreach and additionality.
• Reducing reliance on price controls to enhance market efficiency.
• Enhancing product development and promoting savings and agriculture finance.

VI. Financial Infrastructure and Regulation

The financial infrastructure is a key area for improvement:

• Accounting and Auditing: Financial reporting standards are inadequate, affecting performance measurement.
• Credit Reporting: The Credit Information Center (CIC) needs to expand coverage and improve data quality.
• Creditor Rights and Insolvency: Legal enforcement of mortgage rights is slow, and insolvency processes are not well-developed.
• Payments and Settlements Systems: The National Payments System (NPS) and HVSS/LVSS systems need strengthening for efficiency and transparency.

The regulatory and supervisory framework requires reforms:

• Banking regulation needs to address cross-ownership and improve governance.
• Capital markets regulation should focus on developing a benchmark yield curve and enhancing investor confidence.
• Insurance regulation should adopt risk-based pricing and reduce fraud, especially in MTPL.

VII. Government Reform Program

The government has launched a comprehensive reform program covering:

• Banking restructuring
• SOE restructuring
• Public investment reform

The program is divided into three phases:

• First Phase: Pre-conditions for reform, including audits and identifying systemic risks.
• Second Phase: Immediate actions such as recapitalization, share divestment, and NPL resolution.
• Third Phase: Long-term reforms in capital markets, financial infrastructure, and regulation.

The Vietnam Asset Management Company (VAMC) has been established to handle NPLs, and the State Bank of Vietnam (SBV) is actively involved in implementing these reforms.

Key Technical Recommendations

• Conduct special financial audits to accurately assess NPLs and recapitalization needs.
• Implement liability-driven investment policies for the SSF.
• Strengthen credit reporting systems and expand data coverage.
• Reform mortgage enforcement and insolvency processes.
• Develop a benchmark yield curve for government bonds.
• Promote product market development for savings and agriculture finance.
• Improve financial data quality and transparency.
• Expand institutional investor base and enhance market depth and liquidity.