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]