Top banks spend $4.8bn in primary government bonds

Feb 5th at 13:27

05-02-2013 13:27:49+07:00

A recent Hanoi Stock Exchange (HNX) report shows that seven major banks in Vietnam purchased VND100 trillion ($4.8 billion) government bonds in primary market in 2012, nearly double the total figures of 2009-2011.

Vietinbank topped that list with about VND20 trillion ($961.5 million) spent in purchasing government bonds in the primary market within past year, tripling the total amount it spent during 2009-2011.

BIDV, Agribank, Military Bank, Vietcombank, Maritimebank and Techcombank followed with the purchased value of $807.9 million, $730.8 million, $716.3 million, $687.5 million, $596.2 million and $298.1 million, respectively. They are also the seven banks that topped the primary government bond market during 2009-2012, according to HNX.

The seven banks spent about VND100 trillion ($4.8 billion) in purchasing the note last year, while they spending just totaling VND55.6 trillion ($2.67 million) in three years 2009, 2010 and 2011.
The soaring spending resulted from the rising non-performing loans in Vietnam last year, which made it hard for banks to lend to enterprises.

“It’s not surprising at all to see those banks spend so much money in government bonds in 2012,” said Trinh Quang Dung, analyst for Vietcombank Securities. “The credit activities will continue struggling in this year.”

Bonds became a rare investment channel for commercial banks last year and also significantly profitable for some banks. One of those seven banks’, a manager told VIR that his bank got 37 per cent return via bonds last year. “It’s not hard for major banks to get a return of 20 per cent in this channel last year,” he said.

VPBank, HSBC Vietnam and Ocean Securities – the brokerage arm of Ocean Group which includes also Ocean Bank – was also among the top 10 members purchasing.

To compare with total assets, those major banks in 2012 had spent 2.8-4.5 per cent of their assets in bond, much higher than the ratio range of 0.4-1.5 per cent within 2009-2011. Particularly, Military Bank and Maritime Bank even spent more than 10 per cent of their assets in primary government bond market, rocketing from the ratios 0.92 per cent and 0.4 per cent in 2009-2011.

However, Maritimebank was also the one trading government bonds the most in the secondary market with total trading value of more than VND42 trillion ($2 billion). Vietcombank also had trading value high of VND22 trillion ($1.1 billion). But other banks was not very active on secondary market, as their trading value was of less than VND6 trillion ($288.4 million) each.

Whilst brokerage houses Vietcombank Securities, Bao Viet Securities, BIDV Securities and Saigon Securities were the ones active the most on the market. Also according to HNX’s report, the participation of foreign investors reduced last year with percentage of just 23.5 per cent, down from 30.6 per cent in 2011.