The sharp decline in profits forced many banks to strongly cut costs in the first quarter (Q1) of 2020, but cutting staff salaries was the last option. This is the reason why in the first three months of the year, the salaries of many banks’ employees were not lowered, even increased compared to 2019.
Competing in human resource, banks do not want to reduce salaries.
In Q1 2020, Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) spent 1.975 trillion dong to pay salaries and allowances to employees. Thus, on average, each of the 19,319 employees of Vietcombank (including subsidiaries) was paid 34 million dong per person per month, equivalent to the average income of Vietcombank employees in 2019. With this salary level, Vietcombank continued to maintain its position in the top three banks which pay the highest salaries in Vietnam, although the bank’s profit in Q1 fell by up to 11%.
In Directive 02/CT-NHNN issued more than a month ago, the State Bank of Vietnam (SBV) requested banks to proactively review and sharply cut operating costs, especially spending for salaries and bonuses. Nevertheless, leaders of many banks are very cautious about reducing salaries of employees.
Nghiem Xuan Thanh, Chair of the Board of directors (BOD) of Vietcombank, said that cutting employees’ salaries needs to be very prudent. It is more reasonable to let credit institutions (CIs) to harmoniously calculate the profit sharing with the community. Salaries of management levels can be reduced while keeping the income of employees.
According to survey of Bao Dau tu from the Q1 financial statements of more than 20 banks, the salary level of banks’ employees remains popular at over 20 million dong per months. Nevertheless, the salary fluctuations are significantly different among banks, divided into three groups including the group which continues to raise salaries for its employees, the group which significantly cut salaries, and the group which maintained a stable level.
This is understandable, because among banks which have published their financial statements, over 40 percent of banks recorded profit decline, and 60 percent were still profitable. Most profitable banks maintained the salary growth rate for their employees, in order to increase competitiveness in the personnel market.
According to Nguyen Hung, deputy general Direct of Tien Phong Commercial Joint Stock Bank (TPBank), the bank sets a target of cost savings so that it does not affect profit considerably. However, Hung added that the bank will try to ensure income for employees.
The top 3 banks that paid high salaries in 2019 were Vietcombank, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and TPBank maintained their performance in Q1 2020, with average income of employees exceeding 30 million dong per person per month.
However, in terms of rankings, Techcombank has risen to the position of the bank with the most attractive salary payment, with an average employee income of 38 million dong per month (32 million dong per person per month in 2019).
Meanwhile, despite having the highest profits in the system, due to the strong provisions for risks, Vietcombank did not increase salaries for employees but maintained at stable levels, causing the bank’s employee income to rank the second.
Vietcombank and Techcombank are the two banks with the highest pre-tax profit in the market (respectively 5.222 and 3.120 trillion dong) and the most effective employees. Each month in Q1 2020, each employee of Techcombank generated an average of 93 million dong of profit per month, while the figure at Vietcombank was 90 million dong.
TPBank still ranked the third position in salary payment in the system, with average employee income of 31.5 million dong per month, the highest among banks of the same scale. In Q1 2020, on average, each employee of TPBank created a profit of 50 million dong per month.
The next group of banks paid their employees about 20 29 million dong per month, including Vietnam International Commercial Joint Stock Bank (VIB, 26 million dong per month), Military Commercial Joint Stock Bank (MBBank, 25.88 million dong per month), Vietnam Prosperity Commercial Joint Stock Bank (VPBank, 24.82 million dong per month), Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank, 23.6 million dong per month), etc.
Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) paid an average of 18.4 million dong per month (salaries, allowances) for each employee, while many other banks such as Asia Commercial Joint Stock Bank (ACB), HCM City Development Commercial Joint Stock Bank (HDBank) paid an average of 12 million dong per month to each of its employee.
Considering separate financial statement, in Q1 2020, two more banks entered the list of employees paying over 30 million dong per month VPBank and HDBank. The average income of VPBank’s employees in Q1 2020 reached up to 34.95 million dong per month (up by more than 10 million dong per month compared to last year), second only to Techcombank.
Meanwhile, in Q1 2020, HDBank doubled its salary fund compared to the same period of 2019, raising the average income of the bank’s employee in Q1 2020 to over 31 million dong per month.
The “most disadvantaged” ACB’s employees. Although their productivity is the third highest in the system (each employee of ACB created 60 million dong of profit to the bank each month), their income is often among the lowest in the system with 12.5 million dong per person per month.
Thus, the picture of banks’ employee salaries in Q1 2020 is still fairly positive. However, many bank leaders said that the impact of the pandemic will be reflected clearer in banks’ financial statements. Thus, the profits and employee salaries and allowances will see changes in Q2. Some banks such as Saigon Hanoi Commercial Joint Stock Bank (SHB), HDBank, etc. have announced to lower business salaries and management-level salaries from April 2020.
