Expanding branches financially burdening banks

Bank branches booming

By early November 2008, after opening three new transaction points in the provinces of Kien Giang, Tay Ninh and Vinh Long, Asia Commercial Bank (ACB) had raised its number of transaction points to 178.

Earlier this year, Nguyen Thanh Toai, Deputy General Director of ACB, said that they planned to open 75 branches and transaction points in 2008 to raise the total number of transaction points to 186.

Tien Phong Bank, which began operating in June 2008, has put two branches in Hanoi and HCM City into operation. The bank plans to open four new transaction points in November, and is considering opening transaction points in HCM City, Da Nang, Can Tho and Hai Phong.

Lien Viet Bank, which joined the banking system five months ago, has had 12 transaction points in its network. The bank plans to raise the number of transaction points to 17 by the end of the year.

Other banks, including Dai A, Bac A, Saigon bank and Phuong Nam bank are also establishing more branches and transaction points in order to improve their competitiveness.

Expenses on bank branches

Dao Trong Khanh, General Director of TienPhong Bank, said that the expenses to run transaction points have been increasing, while banks’ operations and conditions have become more difficult, resulting in banks having to wait to breakeven at a later point.

Khanh said that banks now have to compete fiercely with each other in the areas of interest rates, service fees and quality service. Meanwhile, expanding branches and transaction points prove to be the single most effective channel to service clients.

Analysts said that the main challenges for opening new branches are how to seek suitable premises and qualified staffs, as areas of the real estate market and human resources have lost some steam since 2007.

Bui Thi Mai, General Director of Habubank, said that the biggest challenges for small and newly established banks when opening more branches are the capability of staff and the capability of managing the widened networks.