Banks’ business plans will certainly be affected during the Covid-19 epidemic. The problem now is to quickly and more strongly deploy powerful solutions to improve revenue.
Difficulties surround
A report recently released by VNDirect Securities Company stated that the industrial production growth in the first two months of 2020 was much lower than the 9.2 percent growth recorded in the same period last year, showing that this activity has been weakened significantly due to the impact of Covid-19 epidemic.
Domestic production activities are exected to continue to decline in March 2020 and may last until China returns to normal production capacity.
In addition, since consumers have reduced access to crowded places and due to government’s disease control measures, the retail sales of goods in February fell by 7.9 percent compared to the previous month (about 414 trillion dong), largely from the spending cuts in service sector.
In the first two months of 2020, the retail sales of goods were estimated to increase by 5.4 percent compared to the same period of last year (after excluding inflation factor).
The growth figures for the following months are said to be less positive due to the recent development of the epidemic in Vietnam.
The survey results by the Research Board of private economic development with more than 1,200 businesses on the impact of Covid-19 on business activities showed that if the epidemic lasts for six months, 74 percent of businesses could go bankrupt.
In addition, nearly 30 percent of businesses could lose about 20 50 percent of their revenue, 60 percent of businesses could suffer a more than 50 percent revenue decline.
The epidemic has strongly hit businesses and banks. It is estimated that the total number of customers of Vietnam Prosperity Commercial Joint Stock Bank (VPBank) affected in this period has reached nearly 1,000 businesses and tends to increase in the near future if the epidemic remains complicated.
Leader of Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) said that the bank’s estimated amount of outstanding credit to be entitled to interest reduction is 30 trillion dong, of about 300 large businesses. The amount of interest reduction that Vietcombank shares with businesses is about 300 450 billion dong, and higher if including the interest reduction of individual borrowers.
Nguyen Quoc Hung, director of Credit Department of Economic Industries (State Bank of Vietnam (SBV)) said that the banking system has been considering restructuring of repayment period for customers with outstanding credit of 21.753 trillion dong, exempted interests and fees for about 8,000 customers with the interest and fee exemption of 350 billion dong.
The agency continues to consider lowering borrowing interests for 34,350 customers with a loan balance of nearly 185 trillion dong, and has been completing new loan documents with preferential interest rates for 5,493 customers with an expected loan turnover of about 24 trillion dong.
“In addition, credit institutions are continuing to carry out solutions according to the action plans, and customer support scenarios under the SBV’s direction such as developing and implementing preferential interest rate credit support programme with a total value of about 285 trillion dong, further cutting interest rates by 05 1.5 percent per annum (including rural agriculture, small and medium enterprises, sectors hit by the epidemic, etc.),” said Hung.
Promoting retail to increase revenue
Vo Than Hoang Van, general director of Saigon Commercial Joint Stock Bank (SCB) shared that the average growth of SCB in 2020 is expected to be 15%, in which non-interest revenue and currency trading revenue will be at least over two trillion dong.
However, the business plan this year will be affected by Covid-19 epidemic, because the bank has been considering interest exemption for many customers.
In the talk with Dau tu Chung khoan, leaders of many banks said that their profit this year will surely be affected by the disease, but the level of impact is yet to be measured as it is difficult to predict the end of the epidemic.
At the present time, the solutions to ensure operation and make profits of each bank are different, but in general, all are accelerating retail sector.
“On average, less than six percent of people have investment and insurance products to protect their health and finance. Covid-19 epidemic’s influence will help enhance people’s awareness of protecting health. On that basis, we also step up the consultation for people to use these advanced products to protect themselves, as well as their families from the risk of natural disasters and epidemics.
This is a very advanced financial product in a develop financial environment, if it is built well and more effectively, it will bring more benefits to both people and banks,” Van analysed.
In fact, the profit from bancassurance of banks is very huge. For example, at VPBank, the service income of the parent bank in the first nine months of 2019 grew by up to 51.6%. Of which, the bancassurance income increased by 32.3%, accounting for 23 percent of the total service income.
Similarly, the bancassurance income of Vietnam International Commercial Joint Stock Bank (VIB) rose by nearly five times compared to the same period of last year, thereby promoting the service income growth to 145%, accounting for more than 50 percent of the total service income.
Meanwhile, Asia Commercial Joint Stock Bank (ACB) has quickly entered the Top 7 banks with the highest fee income from bancassurance with income growth of this segment reaching 250 percent (414 billion dong), accounting for 29.3 percent of the operating income.
However, by different ways, banks are expanding the image of banks and insurance going along with each other.
For example, at Saigon Hanoi Commercial Joint Stock Bank (SHB), customers borrowing loans from 500 million dong with terms from 12 months or more, and customers depositing from 500 million dong with terms from 12 months or more and from one billion dong with terms from six months or more will be offered 100 percent of the first year insurance premium of SHB’s nCoV Shield with insurance protection reaching up to 100 million dong.
Military Commercial Joint Stock Bank (MB) and MB Ageas Life have launched Corona Guard insurance package of Military Insurance Company (MIC) with benefits including three-month insurance period from the date of contract issuance, exemption from waiting time; death benefit due to Covid-19 infection of 100 million dong, daily hospitalisation support of 4.5 million dong per person, in which the daily support for inpatient treatment is 150,000 dong per day in 30 days.
Previously, MB announced the launch of Corona Insurance programme which offers Corona insurance to MB Visa credit card, or JCB with benefits of up to 100 million dong, in addition to the benefits that cardholders are entitled to such as domestic accident insurance, and 24/24 global insurance; while refunding 5 percent when paying MIC insurance or MB Ageas Life (applicable to the new contracts of cardholders).
