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BANKING & FINANCE

Key growth drivers
The foundation for local banks’ growth in LOW COST CASA GREW ACROSS MANY VIETNAMESE BANKS IN 2020
2020 came from diverse loan portfolios and CASA ratio
income sources. In addition, the impressive 100% 2020 2019
credit growth stemmed from the diversification 90%
of the customer loan portfolio in various 80% ACB
industries, a broadened outstanding debt bal- 70%
ance, and reliable sources of customers, limiting 60%
risks from the pandemic. Banks also flexibly 50%
40%
diversified income sources from businesses
rather than just credit activities. Non-traditional 30%
20%
sales channels such as mobile banking, internet 10%
banking, and fanpages are gradually becoming 0%
the main interaction channels between cus- ACB MB Vietin Sacom TPB BIDV ABB VPB HDB VIB OCB SHB Nam A
tomers and banks, Mr. Tuan noted. Techcom Vietcom Martime Lien Viet SeABank
“Digital banking is key in our overriding
strategy this year,” Mr. Thai said. “We aim to Sources: Banks, Moody’s Investors Service
be serving 20 million customers by the end
of this year. With the help of digital products
such as the MBBank app for individuals, the saving account (CASA) will prove to be major everything still runs smoothly. Covid-19 changed
BizMB app for businesses, and Smart CRM, challenges, according to Mr. Tuan. consumer habits and behavior, as well as the
which provides free 24/7 money deposit and Covid-19 brings too much uncertainty to way enterprises conduct production and business
withdrawal services, we expect to attract businesses. Most will not venture to expand activities, so we had to adapt to new trends.”
more customers. With a vision of becoming production and business but will instead Regarding upcoming plans, he emphasized
‘The Most Convenient Bank’ for customers focus on restructuring and stabilizing opera- the continued push in digitization. “MBBank
in Vietnam this year, we have implemented a tions. Therefore, they need not use bank considers digital transformation to be key to our
number of digital services that have been loans. Some industries in travel and aviation strategy and has been promoting investment in
very well-received by customers. We will also services chains will be greatly affected, and technology and digital products since 2017, before
focus on improving service quality and increas- the cost of provisioning risks will increase. Covid-19 broke out,” he explained. “That is why
ing processing speeds, while aiming to lead The cost of provisioning for credit losses will we have quickly adapted to the new circumstances.”
the market in service speed. MB Group’s rise due to the number of bad debts. Due to As for VietinBank’s future strategies, Mr.
cross-selling capacity will also be pushed up, lower deposit rates, idle cash flows tend to Tho noted that “credit activities continue to
with a growth rate of 40-50 per cent.” move into more profitable investment channels be the key activity, with credit growth sub-
Meanwhile, VietinBank Chairman Mr. Le such as stocks, gold, and real estate, he said. stantially and effectively realized. At the same
Duc Tho emphasized that its solid performance In addressing these issues, he went on, time, VietinBank’s business was promoted to
last year shows the effort, potential, and spirit banks need to look for other disbursement provide comprehensive financial solutions to
of its system and builds a solid foundation channels, such as buying bonds or lending to customers. It will also strongly transform its
for the bank to build its 2023 business plan. invest in assets, with each channel having its customer structure associated with safety and
This year is the first year it has implemented own limitations, diversify loan portfolios, adjust credit quality improvements and minimize
its Medium-term Plan for 2021-2023, which loan balances for high-risk sectors, and avoid new bad debts. Capital mobilization continues
is part of its 10-year development strategy lending in only a few areas. They need strict to be a very important task, as is TT1 (Market
for the 2021-2030 period and vision to 2045. risk management right from the appraisal and 1 - capital mobilized from citizens and economic
It was also the first year VietinBank compre- disbursement stage, to improve loan quality, organizations) capital growth, especially low-
hensively applied Basel II standards, thereby must raise mobilization from term savings, cost capital sources, CASA deposits through
posing new and higher requirements on stan- and increase CASA through strengthening the the provision of modern payment solutions,
dards and results in its operations. connection of payment services with many cash flow management, corporate finance
Ms. Nguyen Thi Thuy Linh, Research Man- potential partners, providing quality and con- advisory services, and developing a compre-
ager at SSI Research, expects that the banking venient payment services to boost the volume hensive set of financial solutions for customers
sector will continue to benefit from low deposit and value of customer transactions. and their ecosystems.” %
interest rates, which will improve net-interest Meanwhile,
margins (NIM). “State-owned commercial Vietnamese banks
banks will likely achieve spectacular growth have been identi-
of 28.3 per cent year-on-year as they gave up fying strategies to
huge interest and fee income to support Covid- cope with such
hit borrowers in 2020 and made tremendous challenges. “The
provisioning efforts to clean up legacy prob- entire banking sec-
lems, whereas joint-stock commercial banks tor had to navigate
are expected to post 22.8 per cent growth in through uncharted
pre-tax profit,” she said. waters from the
volatility of Covid-
19,” Mr. Thai said.
Hurdles ahead
Despite the optimistic outlook, the path “MBBank has had
to 2021 targets isn’t without obstacles. Qualified to maintain its
capital disbursement, provisioning costs, business activities,
reductions in solvency, and current account making sure that

APRIL 2021 | VIETNAM ECONOMIC TIMES | 43