Vietnamese engineering firm Refrigeration Electrical Engineering Co. (REE) plans to invest in two start-up banks in Vietnam as it diversifies into financial services, its chief executive said on Thursday.
Communist Vietnam's banking sector is experiencing growth of more than 20 percent in loans and deposits, fuelled by a fast-growing economy where 85 million people hold just 5 million bank accounts.
"These are new banks which are applying for licences," REE CEO Nguyen Thi Mai Thanh told Reuters on the sidelines of a conference in Hanoi without identifying the lenders.
She said one bank would have a registered capital of 1 trillion dong ($62 million) and another, registered capital of 1.2 trillion dong. The licences have not yet been issued.
Thanh said Ho Chi Minh City-based REE has invested 834 billion dong ($52 million) in shares of Vietnamese banks such as Sacombank (STB), bonds, as well as shares of listed and unlisted firms so far.
Online newspaper VnExpress on Thursday quoted Thanh as saying REE would invest $10 million in the two banks and would also establish its own securities subsidiary.
Shares in REE closed flat at 131,000 dong ($8.1) on Thursday, valuing the firm at $664 million.
Thanh said in the long run, REE expects its core engineering business to generate one third of its profits, property to bring one third and financial investments another third.
REE's net profit is expected to rise 51 percent to 245 billion dong ($15 million) this year as revenues would more than double to 1 trillion dong ($62 million), she said at the conference.
REE, one of Vietnam's first two listed firms when the Ho Chi Minh Stock Exchange opened in July 2000, has targeted an overall growth of at least 20 percent a year until 2010 when its net profit would grow to 800 billion dong, Thanh added.
REE's current core business is in industrial air-conditioning systems and electrical engineering. It also produces household appliances such as washing machines, refrigerators and air-conditioners.
REE also operates a software park in Ho Chi Minh City.
Thanh said REE has been building to add 40,000 square metres of office space, residential areas and industrial zones to bring its total space for lease at the year end to 110,000 square metres and that should generate $15 million in revenues by 2009.
"Until 2010 we would expand our space for lease to 200,000 square metres," she said.
REE's pre-tax profit jumped 55.6 percent in the first seven months of 2007 from a year earlier to nearly $15 million on strong construction demand, the company said
Source: Reuters
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