Vietnam a promising market for wealth and personal banking

In 2022, HSBC reported its adjusted pre-tax profit in wealth and personal banking rose 35.5% year-on-year to $8.5 billion, while group results for the year rose to $24 billion from $20.6 billion.

Turan shared HSBC's plan for unlocking this promising market by offering wealth and personal banking services and products.

What are the most exciting prospects in Vietnam for HSBC?

It is my second time visiting Vietnam in this role and I am always inspired by the energy and dynamism of the place and the people.

We're optimistic about the country's prospects. It is the fastest-growing economy in ASEAN with a GDP growth rate of 8.02% year-on-year in 2022. It also registers the strongest growth in banking returns among ASEAN markets.

HSBC is contributing to this space through our wealth and personal banking business by supporting the evolving needs of the growing middle class. For example, mortgage financing for their aspirations to own a home, credit card services to make life easier and more convenient; help to manage their wealth via partnerships (such as VinaCapital and Dragon Capital); as well as meeting the needs of families who wish to educate their children overseas.

Taylan Turan, Group Head of Retail Banking and Strategy for HSBC's Wealth and Personal Banking business. Photo by HSBC

What are the driving forces behind the growth in wealth and personal banking business?

One core factor is Vietnam's growing middle class which is set to make the country the world’s 10th largest consumer market by 2030, bigger than Germany and the U.K. This trend translates into rising incomes and affluence across all segments of society, and we anticipate the highest growth will be among high-net-worth individuals and the mass affluent population, as these segments hold over 80% of the overall liquid assets.

We expect this structural growth to increase demand for wealth and banking products and solutions, particularly in the retail space.

In 2020, Vietnam approved its National Financial Inclusion Strategy which aims to provide at least 80% of adults with a bank account; and the number of non-cash transactions is expected to expand between a fifth and a quarter annually by 2025. For Vietnam to attain its ambition, it needs the twin tactics of financial services expansion and a shift to a non-cash economy.

With the government's focus on financial inclusion, I see a huge opportunity for the country's wealth and personal banking market.

With such huge potential, what's HSBC's plan for Vietnam?

As we look to grow in Asia, Vietnam is one of our strategic priority markets in terms of wealth and personal banking.

The development of Vietnam's retail industry, including wealth and personal banking, is strongly supported by the country's stable economic growth and population size of approximately 100 million people who are relatively young with rising income levels. Coupled with increasing living standards, Vietnam is one of the most dynamic economies in Southeast Asia that is attracting retailers and financial services.

Firstly, we want to grow our unsecured lending business. Our ambition is to deliver products and services which meet the needs of our growing customer base in Southeast Asia. As part of this, we are doubling down on developing new digital capabilities that match the variety of their borrowing needs, as well as benefits they can use and enjoy instantly.As one of theleading card issuersin Vietnam, we are strongly placed to meet this strong demand.

For example, Vietnam has a low card penetration rate (only 0.11 credit card per capita), combined with fast-growing cardspend at 11.4% CAGR between 2022 to 2026).This card spending growth is much higher than other markets (such as thePhilippines, and Malaysia, at 7.5%, and 11.1% CAGR respectively), signaling a clear opportunity for us to support customers who need credit.

HSBC provides lending to consumers by making banking simple, better, and more accessible in a responsible way. We continuously improve our customer journeys, especially through digital channels, providing customers with simple and reliable information about our products that helps them to make sound financial decisions.

Secondly, we will build on our strong brand affinity to deepen our relationships with mass and emerging affluent customers. They represent the fastest-growing customer segment, and we expect them to grow at 10% CAGR between 2021 to 2025.

Among international banks operating in Vietnam, HSBC is the number one brandand among leaders formarket share of affluent customers. I believe thisstrong statusis largely part of our strong international propositions and best-in-class Premier Relationship Managers.

Last but not least, we aim to harness a rapidly rising need for mortgages - the fastest-growing lending product among the mass affluent segment. I’m told of an old saying that the three most important things in life are "Buying a buffalo, getting married, and building a house". We recognize the pace of Vietnam’s urbanization and need for housing, combined with its strong home ownership culture.

Global economic growth is projected to fall from 3.4% in 2022 to 2.8% in 2023 according to the IMF. Vietnam's GDP growth is expected to slow down this year, too. Is this really a good time for the retail sector?

Despite the challenges in the global environment, we’re optimistic about Vietnam and more broadly Southeast Asia. If you look at the spending trends, the picture is positive.

For example, spending by mass affluent customers - comprising millennials who are tech-savvy and enjoy traveling - is driving the region's economy. They account for two-fifths of household wealth in major Southeast Asia markets, and more than half of their total spending is in the premium and luxury categories. We expect the size of this segment to reach 136 million by 2030.

These regional economies continue to show resilience, with consumption growth driven by a full-scale reopening and pent-up demand, particularly for travel and leisure within the region. HSBC will continue to build innovative products and services that enable consumers to spend and borrow for the experiences that matter most to them and their families.

This year as a whole is going to be a tough one for Vietnam, but I believe that it will overcome the challenges and 2023 will ultimately be successful.