In the last five years, the scale of the Vietnam’s system of credit institutions (CIs) has significantly increased. From more than 5,700 trillion dong by the end of 2013, the total assets of the system by the end of 2018 exceeded 11,000 trillion dong, nearly double after five years.
The total assets of the system are concentrating in state-owned commercial banks (44 percent), and private commercial banks (41 percent), while the total assets of joint venture and foreign banks only account for 10 percent. The remaining three percent is from other CIs such as finance and financial leasing companies, cooperative banks, banks for social policies, and people’s credit funds.
By the end of 2013, there were only four banks with total assets of more than 10 billion US dollars, which are all state-owned banks. However, by the end of 2018, this number increased to 11 banks, including Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank), Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Saigon Commercial Joint Stock Bank (SCB), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Military Commercial Joint Stock Bank (MB), Asia Commercial Joint Stock Bank (ACB), Saigon Hanoi Commercial Joint Stock Bank (SHB), Vietnam Prosperity Commercial Joint Stock Bank (VPBank) and Vietnam Technological and Commercial Joint Stock Bank (Techcombank). In particular, BIDV and Agribank are having the largest total assets, reaching 1,300 trillion dong.
These 11 banks are very influential in the market as their market share in terms of deposits and lending accounts for more than two third of the market. The difference between them and smaller banks is increasingly widened.
In the group, SCB, VPBank, Sacombank, BIDV and Vietcombank are the five banks having the fastest growth in total assets with respectively 176 percent, 167 percent, 152 percent, 139 percent and 129 percent.
While the total assets increase exponentially, the equity and charter capital of banks grow fairly slowly. By the end of 2018, the total equity of CI system reached more than 806 trillion dong, up by more than 339 trillion dong compared to 2013 (equivalent to 73 percent growth). In particular, the equity of finance and financial leasing companies increased the most with over 10 times. Meanwhile, the equity of state-owned banks grew the lowest (59 percent).
In five years, the charter capital of the system was supplemented with more than 152 trillion dong, equivalent to 36 increase. Accordingly, by the end of 2018, the total charter capital of the entire CI system reached more than 576 trillion dong. In particular, the charter capital of private joint stock banks accounts for the largest proportion and also increased the fastest in the past five years (38 percent).
Nevertheless, in fact, the charter capital status also clearly differentiates. The top banks such as VPBank, Techcombank, MBBank, ACB, etc. have many advantages in raising capital thanks to their impressive business results, good growth of stocks, and investors’ interest. Meanwhile, a series of small banks with charter capital of around three trillion dong are still struggling to find a way to raise capital.
The overly fast growth in total assets while charter capital was not timely supplemented has led to the decline in the Capital Adequacy Ratio (CAR) at many CIs. In late 2018, the CAR of the entire CI system was 12.14 percent, in which CAR of state-owned banks was only 9.53 percent. Joint venture and foreign banks still maintained fairly high CAR of 23.88 percent.
The low CAR of Vietnamese banks is posing many challenges and is considered a bottleneck for the growth of the whole system. According to a report of Viet Dragon Securities Company (VDSC), CAR of the banking system of Vietnam is at the lowest level in the Asean.
