Early recognising the benefits of the Basel II in operations, banks have made efforts to stay ahead of the majority of the market to successfully apply the Basel II before the deadline of the State Bank of Vietnam (SBV)
Basel II is the second version of the Basel Treaty developed by the best financial experts from the central banks and banking regulators of G10 groups. The focus of Basel relates to the level of capital safety to ensure that financial institutions always maintain a certain amount of capital needed to stay first against risks.
To develop a system of Vietnamese credit institutions (CIs) in accordance with international standards, in 2014, the SBV appointed a group of 10 strong banks to pilot the Basel II application, preparing a roadmap to require all banks in the system to carry out Basel II. This group includes Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Vietnam Prosperity Commercial Joint Stock Bank (VPBank), Vietnam International Commercial Joint Stock Bank (VIB), Maritime Commercial Joint Stock Bank (MSB), Military Commercial Joint Stock Bank (MB), Asia Commercial Joint Stock Bank (ACB) and Vietnam Technological and Commercial Joint Stock Bank (Techcombank). Of these, five banks have been recognised to meet the Basel II standards for risk management, including Vietcombank, VIB, ACB, MB and VPBank.
Despite not being in the pilot group, understanding the importance of Basel II in the way of building a strong and transparent bank, Tien Phong Commercial Joint Stock Bank (TPBank) still prepared and determined to become one of the first banks to be named for Basel II implementation. The bank voluntarily reported to the SBV the process of applying Basel II and has been approved by the SBV since May.
TPBank’s general director Nguyen Hung said that with the determination to complete the Basel II application ahead of time, each member in the bank’s Basel Project Board put himself in the spirit of a sprint race, thereby the Basel II application was increasingly being shortened.
In the period of 2015 2017, TPBank had hundreds of innovation initiatives to accelerate the process of meeting the Basel II. By 2018, the application of new technology and initiatives become more and more active. To quantify data, the bank started to apply Optical Character Recognition (OCR) technology which is able to quickly transfer documents from images to characters (in both English and Vietnamese) for big data digitisation application. In credit management, the bank applies Loan Origination System (LOS) which allows automatic assessment of objective risks, increasing and decreasing the credit limit right from the start of the loan until disbursement. That helps the information be clear and transparent, and the approval of the loan is decided more quickly.
Good results from information quantification and digitisation
In 2018, thanks to the stable IT system and management processes; and full evaluation of credit risks, operational risks and market risks, TPBank has go new features and new services and has completed the existing facilities, allowing customers to access remote, convenient and safe modern banking services. The results are very encouraging.
Accordingly, in 2018, TPBank recorded net interest income growth of 38 percent, credit growth of 18 percent, decline in average interest expenses, and sharp growth in foreign exchange trading and other incomes. The bank’s revenue from services increased by fivefold in Q4 and was three times higher than the whole year 2017. TPBank’s profit significantly rose to 2.258 trillion dong.
The growth momentum has continued to be maintained in 2019. According to TPBank’s financial statement, closing Q1 2019, the bank’s total operating income reached 1.886 trillion dong, up by nearly 700 billion dong compared to Q1 2018. In particular, its pre-tax profit was 853 billion dong, up by 66 percent compared to the same period of 2018.
By the end of March 31st 2019, the total assets of TPBank reached nearly 140 trillion dong, up by nearly three percent compared to the end of 2018. The bank’s equity was 11.3 trillion dong, CAR was more than 9.5 percent, while the SBV requires banks to maintain a minimum of an eight percent CAR to meet the Basel II standards.
