Mar 05, 2018 / 17:26

Services make up high proportion in banks’ profits

Income from services in most of commercial banks skyrocketed by 35 percent yearly on average in the 2015-2017 period, financial reports from the banks showed.

Some bank posted very high growth from the non-lending segment in the period such as SHB (up 184 percent), Kienlongbank (up 125 percent), and BacABank, TPBank and MBBank with a surge of 70-90 percent yearly.
 
SHB’s income from services accelerated by 184 percent in 2015-2017
SHB’s income from services accelerated by 184 percent in 2015-2017
The surge last year alone even reached up to 48 percent against the previous year to help the banks’ income from services touch VND35 trillion (US$1.54 billion). Nine banks posted the profit of more than VND1 trillion each from the segment.
The achievements were gained after the banks have considerably invested to improve the quality of their retail banking services to enhance competitiveness in the market. They have also focused on other aspects such as marketing, technology and human resources to attract more individual customers to non-credit services.
This year, banks are expecting the revenue from fees and retail banking services to become their main income sources this year, as a result of rising market demands.
According to Nguyen Duc Vinh, general director of VP Bank, after years of investing in the financial company FE Credit, his bank was expecting to receive a large profit from the company in 2018.
Vietcombank also expects to better exploit the potential retail banking segment this year, as it recruited Thomas William Tobin, a Canadian foreign senior expert in retail banking, last year, to be its retail banking director. It was the first time the State-owned bank appointed a foreigner in its management board, showing its priority for the retail banking segment.
Vietcombank’s chairman Nghiem Xuan Thanh hoped that the expert, who has expertise in global and Vietnamese finance, will help the bank make a leap in the retail banking segment.Vietcombank is targeting to become the country’s leading bank in retail segment in 2020, Thanh said.
According to Nguyen Dinh Tung, general director of the Orient Commercial Joint Stock Bank, his bank is expected to earn a pre-tax profit of more than VND1 trillion in 2018, thanks to specific strategies in the sales of financial products, especially in non-credit services.
Some other banks have also planned to better exploit the potential business segment in 2018 through mergers and acquisitions last year. Typically, Shinhan Bank Vietnam acquired ANZ’s retail banking services or the Vietnam International Bank (VIB) acquired the HCM City’s branch of Commonwealth Bank of Australia.
According to experts, with more than 93 million people and sharply increasing consumption, Vietnam is considered a hot destination for the retail banking segment, which is why banks have strategically planned to boost the segment.
In fact, the in-cash habit of Vietnamese people is no longer an obstacle to the development of card network and non-credit services. Thus, several banks are aiming to give their customers a variety of non-traditional credit services, such as savings and transactional accounts, mortgages, personal loans, debit and credit cards.
Nguyen Thanh Nhung, general director of VietBank, said retail banking services would be a key to making a sustained and stable profit for the banking sector this year. The development of non-credit services contributes to diversifying bank’s services, thereby bringing more customers. This type of service will also disperse risks and create higher profits for commercial banks, said Nhung.
According to Tran Du Lich, a member of the National Financial and Monetary Policy Advisory Council, banks currently not only gain profits from lending but also from retail banking services, so the move to invest more in retail services is inevitable in the future.