In the context when the credit growth room limit can hardly be expanded, banks gradually focus on customer ecosystem, thereby promoting cross-selling products to increase revenues form services, contributing to enhancing operational efficiency.
This is also the reason why banks are racing in bancassurance development with contracts of up to ten years or even 20 years.
The bancassurance deals have been promoted in the recent time. For example, Asia Commercial Joint Stock Bank (ACB) has just partnered with Manulife to expand the portfolio of distributed insurance products, from which ACB customers will have more options when buying insurance.
According to ACB
S deputy general director Tu Tien Phat, after the first nine months of 2019, the bank’s bancassurance revenue grew by 250 percent, reaching the Top 5 banks with the largest bancassurance market share in Vietnam.
In 2019, it is expected that bancassurance will bring about 600 billion dong of revenue to ACB, threefold higher than 2018 and it will be promoted in the following years.
The semi-annual financial report in 2019 of Vietnam Technological and Commercial Joint Stock Bank (Techcombank) showed that the bank gained 390 billion dong in profit from the sale of insurance products, with insurance revenue increasing by 34 percent.
With the target to become a retail bank, Saigon Commercial Joint Stock Bank (SCB) is implementing different business plans to raise non-credit revenue, reducing the dependence on credit. Accordingly, SCB has accelerated the provision of comprehensive financial product packages.
This strategy has brought a positive non-interest revenue to SCB with 80 percent increase in 2018. This number is expected to be higher in 2019.
Considering income structure, SCB has recorded a clear shift in the recent time with fairly strong rise in non-interest revenue, accounting for more than 30 percent of the total income.
SCB’s semi-annual financial report in 2019 pointed out that the profit from service activities increased by 46 percent, reaching 749 billion dong. SCB is currently distributing insurance products of Manulife Vietnam and Bao Long Insurance.
For HCM City Development Commercial Joint Stock Bank (HDBank), the bank has expanded its customer base with Mergers and Acquisition (M&A) plan and currently has more than seven million customers. HDBank successfully merged with Dai A Commercial Joint Stock Bank (DaiABank) and acquired 100 percent stake of Societe generale Vietnam Finance One Member Company Limited SGVF (now renamed HD Saison).
With the plan to merge with Petrolimex Group Commercial Joint Stock Bank which is being completed, HDBank has the opportunity to reach potential customers of both PGBank and Petrolimex which is the bank’s major shareholder.
In addition, Vietjet shareholder is having payment accounts at HDBank. That is also an opportunity for it to access and expand the customer file. According to HDBank’s representative, this is a favourable condition for HDBank to become one of the leading retail banks.
Concerning the merger deal with PGBank, HDBank’s general director Nguyen Huu Dang said that the State Bank of Vietnam (SBV) has approved in principle the merger. HDBank has assigned its representative to join PGBank’s Board of directors to accelerate the merger process. The merger is expected to be completed by the end of this year.
In fact, HDBank’s financial ratios such as Return on Asset (ROA) and Return on Equity (ROE) which were recorded at respectively 1.7 percent and 20 percent; the consolidated Net Interest Margin (NIM) which increased to 4.4 percent, being in the leading group; and the pre-tax profit of 2.211 trillion dong after the first half of 2019 stated in the bank’s 2019 semi-annual financial report have partly shown the effectiveness of the strategy to expand customer ecosystem of HDBank.
According to Viet Dragon Securities Company (VDSC), the strategy to expand customer file through M&A or cooperation with insurance companies is increasingly effective when it helps banks boost revenue from services, thereby gradually reducing the dependence on credit, contributing to improving operational efficiency.
