The gap in some aspects between Vietnam Bank for Agriculture and Rural Development (Agribank), Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) is growing. For example, the average income of employees in “Big 4″ group differs by tens of millions dong per month.
Although some private banks are growing very fast, the size and influence of the market of the group of four leading state-owned commercial banks, “Big 4″ banks. In the eyes of investors or the workforce of the banking industry, the business of “Big 4″ has always generated great attention.
Strategic plan for the development of Vietnam’s banking industry up to 2025 and orientation to 2030 approved by the prime minister identified that state-owned commercial banks would continue to play a key and dominant role in scale, market share and market regulation.
Agribank often considered the “big brother” in the system years ago. However, with the early equitisation, the remaining three banks, BIDV, VietinBank, and Vietcombank, accelerated quickly. In terms of scale, Agribank was still the leader but in terms of business results, it had to compete fiercely, even losing compared to the other three banks.
Total assets: Over one quadrillion dong. Agribank took the lead in terms of loans and deposits
The current total assets of all four banks Agribank, BIDV, VietinBank and Vietcombank surpassed the one quadrillion-dong mark. At the end of 2018, the total assets of these four banks accounted for 43 percent of the credit institution system, showing the great influence of this group of banks.
Among four banks, Agribank had the largest loan balance and mobilised customer deposits, both exceeded 1 quadrillion dong. Following are respectively BIDV, VietinBank, and Vietcombank.
Compared to the other three banks, Vietcombank’s loan balance was much lower, only 616.949 trillion dong at the end of 2018, which was only about 60 percent of Agribank.
In terms of deposits, Vietcombank was the bank with the largest amount of non-term deposits, showing the bank’s cheap capital advantageone of the factors that helped improve profit margins.
About the internal bad debt, while Vietcombank increased slightly by a few dozen billion, Agribank reduced more than 2.4 trillion dong, then VietinBank and BIDV increased quite strongly. Internal bad debt of VietinBank and BIDV at the end of 2018 increased by 52 percent and 41 percent respectively from the beginning of the year to 13.635 trillion dong and 17.201 trillion dong.
Vietcombank’s bad debt ratio was the lowest, less than one percent. Meanwhile, BIDV was the highest with 1.8 percent, Agribank and VietinBank at 1.6 percent.
Asset quality at Vietcombank was much better than the other three banks when they also cleared debts at Vietnam Asset Management Company (VAMC). Meanwhile, BIDV had more than 14.138 trillion dong of special bonds, VietinBank was 13.427 trillion dong, and Agribank was 7.75 trillion dong. Most notably, the special bond volume of Agribank dropped by 81 percent in just one year. This bank and BIDV all set a target to clean up debt at VAMC this year.
Profit scale: Why Vietcombank did not have the highest revenue but still outstripped the remaining three banks in terms of profit?
With the largest loan balance and network and operations spread across the country, Agribank’s total income was much higher than the other three banks, reaching 52.827 trillion dong in 2018; while BIDV ranked second at only 41.931 trillion dong.
However, the massive system also led to large operating costs. Therefore, net profit from business activities of Agribank, BIDV, and Vietcombank was not separated too much (much less than several trillion dong).
Notably, Vietcombank did not have the highest revenue but had the leading earnings before interest and taxes (EBIT), and outstripped the remaining three banks. EBIT of Vietcombank in 2018 was over 18 trillion dong, two times higher than BIDV, Agribank or VietinBank.
The main reason was at risk provision. While Vietcombank only had to extract 7.4 trillion dong, BIDV reached 18.259 trillion dong, Agribank was 21.707 trillion dong, VietinBank was 7.692 trillion dong. With high bad debts and pressure to settle debts at VAMC, provision expenses would still be a burden for BIDV in 2019.
Among four banks, only VietinBank experienced a decline in revenue and profit in the past year, mainly due to a sharp decline in net interest income when the bank withdrew the accrued interest. The total operating income of the bank was only 27.3773 trillion dong in 2018, a decrease of 12.6 percent compared to 2017. EBIT was only 6.365 trillion dong, the lowest in “Big 4″. Capital hike would still be the decisive factor for the growth of this bank in 2019.
The average income of “Big 4″ employees always led the system. However, the differentiation within this group was also very large, up to tens of millions dong.
Vietcombank’s separate financial statements said that the average income of these bank employees in 2018 reached 33.47 million dong per month. Meanwhile, at VietinBank, this figure was only 22.26 million dong per month, less than 11 million dong.
Agribank increased the most income for employees in the past year. The average monthly income of the bank’s employees increased by nearly 7 million dong in 2018 to 28.91 million per month.
BIDV still maintained the same income level for employees as the previous year, in 2018, reached 25.28 million dong per month.
