Banks are diversifying their sources of income to reduce their dependence on credit

VIETNAM, June 3 –

Tellers and bank customers in Hà Nội. Service revenues contribute significantly to the positive business results of many banks in the first quarter of 2022. — Stock Photo

HÀ NỘI — Banks have promoted a goal of diversifying sources of income to reduce dependence on credit.

The recently released Q1 2022 financial statements of many banks showed that in addition to rapid credit growth, service revenues contributed significantly to banks’ positive business results over the period.

Typically, in the first quarter of 2022, Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) made a net profit of VNĐ2.58 trillion on services and VNĐ1.52 trillion net profit on foreign exchange transactions.

For Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), service revenues in the first quarter of 2022 reached VND 1.79 trillion and VND 1.53 trillion, in up 35% and 83% compared to the same period last year, respectively.

Many other private joint stock banks such as Vietnam Prosperity Commercial Joint Stock Bank (VPBank), HCM City Development Commercial Joint Stock Bank (HDBank), Military Commercial Joint Stock Bank (MB), Asia Commercial Joint Stock Bank (ACB), Vietnam International Commercial Joint Stock Bank (VIB), Maritime Commercial Joint Stock Bank (MSB) and Saigon Hanoi Commercial Joint Stock Bank (SHB) also recorded many positive results in service businesses in the first quarter of 2022.

MB, for example, saw a 4.8% increase to nearly VN1.12 trillion in service profit thanks to a large contribution from the bancassurance channel. The bank’s profit on foreign exchange transactions increased by 98% to 467 billion VNĐ.

Meanwhile, MSB also achieved more than VNĐ335 billion in net profit from services activities in the first quarter of 2022, up almost 175% compared to the same period of 2021, mainly thanks to the credit card, card and card segments. insurance services and payment activities.

For VIB, non-interest income amounted to VNĐ650 billion, contributing 16% to the bank’s total operating income.

Among the service businesses of banks, bancassurance channels accounted for a fairly large share in Q1 2022 and contributed significantly to the service revenue structure of many banks. The income should increase further next time.

Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) Vice President Phạm Doãn Sơn said the bank was negotiating with its partners over bancassurance, as the insurance contract between the bank and Dai-ichi Life expires in May 2022.

Banking expert Nguyễn Trí Hiếu said News from Việt Nam that diversifying revenue streams is one of the goals that many banks have been focusing on in recent years, especially in the past two years when the traditional source of revenue from credit activities has slowed down and posed risks higher due to the pandemic.

“Increased service income has helped banks to operate in a healthier and more sustainable manner, and to minimize risks. The change will also contribute to the gradual achievement of the objectives set out in the Banking Sector Development Strategy,” said Hiếu.—VNS