Financial investment: many opportunities, big profit

Aiming to become multi-area financial groups, commercial banks are promoting financial investment services besides their old business fields.
On July 25, the Saigon Thuong Tin Investment Joint Stock Company (SacomInvest) became operational in HCM City with chartered capital of VND300 billion (US$18.75 million). Its founding shareholders are Sacombank, Sacomreal, Toan Thinh Phat, Thanh Thanh Cong, in which Sacombank contributes 11% of capital.

SacomInvest operates in various fields, such as business management consulting, investment project management, real estate business, commercial brokerage, transport work construction, building infrastructure facilities for industrial zones, etc.

With the great financial potentials of its founding shareholders, SacomInvest focuses on infrastructure, energy, and real estate (high-class apartments, offices). The firm also plans to focus on business purchasing, buying the majority of shares of companies that have good foundations but operate ineffectively.

Luong Dinh Quang, Chairman of SacomInvest Board of Directors, said that SacomInvest had bought 40% of the stocks of the Kien Giang Tourism Company, 30% of the Dang Huynh Industrial Zone in the southern province of Long An and had become a strategic shareholder of the Bourbon Gia Lai Sugar Company and Nam Viet Investment Joint Stock Company.

According to Dang Van Thanh, Chairman of Sacombank Board of Directors, the real estate market is getting warmer. The need for housing, workshops, offices for lease is increasing. This is an opportunity for investment companies.

The Bank for Investment and Development of Vietnam (BIDV) has also set up a branch of the BIDV Financial Investment Joint Stock Company in HCM City to expand the company’s operations in the south.

It is easy to see that banks are establishing financial investment companies. Some banks like the Bank for Foreign Trade of Vietnam (Vietcombank), the Bank for Agriculture and Rural Development (Agribank), Sacombank have made joint ventures with some foreign financial institutions to set up securities investment funds.

BIDV has combined with six groups to set up the Industrial and Energy Management Fund Company, which has up to VND10 trillion (US$625 million) of capital. Meanwhile, Southern Bank has negotiated with Amcorp Bhd (Malaysia) to establish financial, insurance, securities trading, fund management companies in Vietnam.

There are many infrastructure investment projects witnessing the participation of banks. The HCM City-Trung Luong-My Thuan-Can Tho highway project has capital of BIDV, the Hanoi-Hai Phong highway, capital from Vietcombank.

According to Tran Phuong Binh, General Director of DongABank, through financial investment, banks can provide services for clients of its partners. For example, DongABank cooperates with water supply companies to gain the payment service for clients of water supply companies. The bank is also ready to loan to clients of water supply companies to install water meters, etc.

Financial investment is now a lucrative area of banks. Of the total VND880 billion ($55 million) of profit so far this year of Asia Commerce Bank (ACB), more than 30% comes from financial investment.

Ly Xuan Hai, General Director of ACB, said that ACB was trying to take advantage of 40% of its chartered capital to bring about big profit for the bank.

In financial investment, ACB divides its capital into two parts: one to buy shares of some companies to become their strategic shareholders and the other to invest in short-term securities. However, financial investment is highly risky so the bank is always very careful in making its portfolio and has to develop a professional risk management system.

Source: VNE