UOB’s Vietnam unit struggled in 2021

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UOB‘s Vietnam unit appears to have had a tough year, reporting Wednesday operating profit for 2021 dropped 72 percent from 2020 to S$4 million.

“Vietnam is a small book. A lot of the drop was because of some of the margins,” due to competition, Lee Wai Fai, UOB’s group chief financial officer, said in a press conference Wednesday.

He said the book in Vietnam is less than S$10 million.

“But it’s an important market for us. It’s growing. And our medium-term plan, together with the Citi acquisition, was to try and target that consumer growth as the country evolved,” Lee said.

In mid-January, UOB announced it would acquire Citigroup‘s consumer banking business in Indonesia, Malaysia, Thailand and Vietnam in an around S$4.9 billion deal, which the bank has called transformational.

But other banks have reported better results in Vietnam.

Another foreign bank, HSBC, touts itself as one of the largest foreign banks in Vietnam, doesn’t break out its results for the country in its earnings reports. But HSBC has highlighted several large deals in the country, including a commitment to arrange up to US$12 billion of direct and indirect sustainable financing by 2030.

Vietnam-based Techcombank posted 2021 profit rose 46 percent from 2020, with its net interest margin growing by 81 basis points to 5.8 percent in the year, according to a Maybank Securities report earlier this month.

To be sure, the Maybank report labelled Techcombank, or TCB, as “the best bank to withstand Covid-19 challenges and capture growth opportunities.”

Another Vietnam-based bank, Vietcombank, or VCB, reported its profit growth almost 19 percent in 2021, according to a separate Maybank report. That report said, “VCB tactically managed down profit in FY21 to comply with the central bank’s rigid control of state-owned banks’ earnings growth during Covid.”

For the full year, UOB reported net profit increased 40 percent on-year to S$4.08 billion on total income of S$9.79 billion, up 7 percent on-year.