Sector Overview

The banking sector continues to grow faster than GDP as the financial system of Vietnam modernizes. With approximately 70% of the population under 40 years of age, Vietnam’s young population will drive continued high growth rates for the local banking industry. Banking provides a leveraged play on the economy as financial intermediation grows in importance and bank instruments replace cash. For all of the Vietnamese banking sector’s rapid growth over the last several years, it remains underpenetrated as shown in the charts below.

Banked population as % of total population 2011*


Source: AC Nielsen, GSO, Euromonitor, Business Monitor International
(*) "Banked population” defined as population 15 years older that has a formal relationship with a bank or other financial institution via current savings account, checking account, credit card or a combination of these products

Credit cards in use as % of total population**

Source: Research
(**) Credit card numbers for India and Vietnam obtained as of March 2011 and June 2011 respectively; for other countries credit numbers reported as of end of 2011; all population estimates obtained as of end of 2011

The banking industry is an indirect play on the Vietnam consumption theme. With the expected GDP growth of 8% in 2011-2015F and the hugely underpenetrated banking sector, we believe that banks with strong fundamentals have a long term secular uptrend story.