Low Risk Investment Tools For Term Deposit Is Consider Safe For Country Like Vietnam?

Term deposit is often categorised as a low risk investment tools, and even in some countries like Singapore and Malaysia are almost known as risk free investment. How about for country like Vietnam which provide an attractive yield of average 5-7% rate per annum for their Term Deposit? Is it still consider as a low risk investment tools?

Bank defaults are very rare, however, there is still a possibility. Hence, it is still not 100% guaranteed, and is categorised as low risk investment due to the low possibility. 

Vietnam local banks with high interest rate for Term Deposit:

1. Sacombank
2. Asia Commercial Bank (ACB)
3. Vietcombank

This article consists of series of events compiled and summarise solely for general information purposes only.

Sacombank

01/2018:

• Government approved scheme restructuring improves Sacombank health and achieve a decent results for 2017.
• Its non-performing loans (NPLs) ratio has been improved by reducing from 6.68% to 4.28%. 
• The bank is among the largest in terms of network with 566 transaction offices in 48 cities and provinces in Vietnam, Laos and Cambodia. 

[Sources from vietnamnews.vn]

  

Asia Commercial Bank (ACB)

02/2014:

• Two former officials prosecuted in ACB bank case. 

[Sources from bizhub.vn] 

05/2014:

• Four former officials of Asian Commercial Joint Stock Bank (ACB) were all arrested on Wednesday for their involvements in a serious financial case uncovered at the bank in 2012. 

[Sources from vir.com.vn] 

01/2018:

• Standard Chartered Bank has ended its 12-years partnership with Asia Commercial Bank (ACB), by offloading its entire holding of more than 154 million shares with the bank. 
• Based on the news, the foreign bank had explained its exit from the partnership due to under pressure to cut costs after suffering losses from emerging markets. 
• There seems to be a trend that foreign banks are withdrawing investment from local banks. 
• ACB demonstrated strong performance, with consolidated profit of more than 2 trillion VND by the end of September 2017, up 60% year-on-year. Its share price climbed 76% in 2017.

[Sources from ven.vn]

08/2018:

• The State Bank of Vietnam has approved Asia Commercial Bank (ACB) proposal to increase its charter capital from VND11.25 trillion (US$479 million) to VND12.88 trillion (US$548.34 million). 
• ACB reported a net profit of VND2.46 trillion in the first half of the year, 2.5 times higher than the same period last year. 
• However, the bank’s outstanding loans in the period rose by 11.7% to VND219.59 trillion. 
• At the end of June, the bank’s total assets had reached VND309.96 trillion, up by 9% against the previous year.

[Sources from english.vietnamnet.vn]

Term Deposit Rate:

• Below is the illustration example of ACB Bank’s fixed deposit rate as of 12/2018, with example of 100,000,000 VND (equivalent to SGD $5913), and interest payment at maturity. 

[Sources from acb.com.vn]

Vietcombank

• The Joint Stock Commercial Bank for Foreign Trade of Viet Nam (Vietcombank). 

08/2018: 

• Based on the news, Vietcombank will sell all of its remaining 1.48 million Orient Commercial Bank (OCB) shares at an auction on September 6.
• The bank is estimated to earn nearly VND27.9 billion (US$1.19 million) if the transaction succeeds. 
• In earlier transaction on April, Vietcombank had succeed to sell 6.67 million OCB shares to 128 investors, including one institution, with earning of VND171.96 billion.
• The purpose to offload holdings of OCB shares is due to central bank’s Circular 36 regulation which allows commercial banks to hold shares in a maximum of two other credit institutions, with the stake in each not exceeding 5% of the total equity of that institutions. 
• Apart from OCB, Vietcombank also holding shares with Eximbank and Military Bank. 

[Sources from vietnamnews.vn] 

09/2018:

• Vietcombank has offered to sell 45.6 million shares it is holding in Eximbank (Viet Nam Export-Import Joint Stock Commercial Bank). 
• The deals purpose is to help Vietcombank to comply with regulatory Circular 36, which allows commercial banks to hold shares below 5% in other financial institutions. 
• Vietcombank holds more than 101 million shares of Eximbank, equal to an 8.24% stake. In the event, if the deals succeed, Vietcombank will cut its ownership in Eximbank to below 5%, and receiving an amount of VND661 billion ($29.4 million) from the deal. 

[Sources from vietnamnews.vn] 

Expenses Tracking - March 2018

By tracking my monthly expenses, I started to notice the similarity of the expense trend based on my history record. The high expenses is usually due to either travelling or bulk purchase item, which hardly affected by other reasons. I had a short vacation trip with my loved ones at the island nearby, which is the Bintan Island. We bought a travel package to a luxury resorts, ‘The Canopi Bintan Resorts’.  It was quite a relaxing short getaway, but the expenses for the travel at such a near island are quite pricey. Anyway, if you have not been there, I think it is still worth an experience for the pricey package. 

Our travel expenses to the Bintan Island costs about $600++ for a 2 days 1 night stay, which include the accommodation, transports, food, some activities at the resorts and a normal massage package. The cost is actually quite pricey and with the same amount for 2 persons, we could actually opt to travel to Bali, which most of my friends and family members’ advice the same as well. 

But because I had been to Bali before, so we would like to experience the luxury stay at the nearby island. The canopy theme of the resorts itself was quite interesting and with the beautiful man-made beach scenery, it caught our attention to give it a try. 

Expenses for 2018

Image extracted from Seedly mobile apps.  

Image extracted from Seedly mobile apps.
Notes: Image has been edited from the original screenshot.

Expenses Tracking - February 2018

The expenses on February return to be in a controlled level, as I’m busy spending the time at home with family celebrating Chinese New Year, doing house chores for pre-CNY preparation. Most of the time we cook our own food at home as it is hardly to get to eat at outside during the week of CNY, even if you could find the restaurant, it is either too crowded or too expensive as it is CNY festival. Hence, we decided to spend the quality time making our own dishes and having reunion meal together.  

An average monthly expense of not exceeding $1,000 seems quite positive and healthy for my financial plan.  

Expenses for 2018 

Image extracted from Seedly mobile apps. 

Image extracted from Seedly mobile apps.
Notes: Image has been edited from the original screenshot.

Expenses Tracking - January 2018

January as the new year and new beginnings so the expenses got slightly increase. The majority of the expenses goes to the food as there are a few occasions and gathering going on. As it is near to the Chinese New Year, as common practice by the local Chinese, there will be rounds of pre-CNY gathering with colleagues, friends and families. 

Also I had spent a short vacation as the beginning of the New Year with loved ones, so there are slight expenses goes on Travel. 

Expenses for 2017

Image extracted from Seedly mobile apps.

Image extracted from Seedly mobile apps.

Notes: Image has been edited from the original screenshot.

Cash Rebate from OCBC Titanium Rewards

I had participated on OCBC Titanium Rewards promotion on Apple Pay activation campaign. It was a simple campaign where OCBC give out $20 rebate rewards only by tagging your OCBC Titanium Rewards Credit Card with your Apple Pay mobile device and performs a single transaction with any amount! 

I had received cash rebate of $20 as promised by OCBC just within a month after I activated my Apple Pay with the OCBC Titanium Rewards card and with single transaction transacted. 

Thanks to OCBC for running such rewarding campaign and looking forward for any other campaigns in the future. 

 Image extracted from my OCBC SMS notification. 

Image extracted from my OCBC transaction history.

Image extracted from my OCBC SMS notification. 

Summary Expenses for 2017

As learning throughout the journey from achieving my first 1 Million SGD, with the guidance and advices from various well-known financial advisers and bloggers, one of the basic of achieving your financial goals is to track your expenses. By tracking your expenses, it could indirectly help you to further your planning on your savings and keep track on your direction to gain more income as well. 

I had summarized my spending for 2017 with the monthly expenses recorded every month via Seedly mobile apps. Thank you to the free apps provided by Seedly.sg  which is a useful tool for achieving my financial goals. 

I only started to use Seedly mobile apps to track my monthly expenses started from September 2017. Therefore, I only able to capture my expenses records for 2017 from September till December, which is about 4 months. Although this might not provide a very accurate expenses records, but at least the average spending per month could be some guide of the rough estimation of monthly expenses. This could help me to plan my expense budget for 2018. 

Total Spending                              : $6,443.27 
Estimated Spending (per year)  : $19,329.81 
Average Spending (per month) : $1,610.82 

I had also projected my monthly expenses into a chart formatting for a view of the spending trend. The trend seems to increase from September onward with incremental month by month. This is also due to holidays and festive seasons on year end. It is the time where we used to plan to grab cheap sales that we had long controlled our tempting to purchase the items we want before the sales. The unavoidable season where shopping for discounts and promotions for our clothes and presents. 

Aside to that the holiday seasons on year end also affect to the incremental of monthly spending, especially on December. A portion of the spending was spent on my holiday vacations. I will probably share out the story of my vacations once I settled down my stuff and compiled all the photos together. 

Image extracted from Seedly mobile apps. 

Expenses Tracking - December 2017

The expenses for December remain high as there are more sales during the year end, especially Christmas and New Year sales. 

This is something that hardly avoid when there are sales everywhere, and time to buy presents for Christmas. 

Quite a portion of the expenses on December also spent on Travelling as it is always a good time to have long getaway holidays during Christmas and New Year week. 

Expenses for 2017

Image extracted from Seedly mobile apps. 

Image extracted from Seedly mobile apps.
Notes: Image has been edited from the original screenshot.

Expenses Tracking - November 2017

The expenses for November increased slight higher due to some bulk purchase for the coming year end. 

Expenses for 2017

 Image extracted from Seedly mobile apps.  

Image extracted from Seedly mobile apps.