Banks usually offer attractive salary and bonus levels to retain good employees. Thereby, whatever happens, cutting staff salaries is the last option.
Statistics at more than 20 banks which have announced financial statements in the second quarter (Q2) of 2020 showed that Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) employed the highest number of employees in the first half (H1) of 2020. Specifically, by the end of June 2020, Vietcombank had 20,115 employees, up by 1.167 persons compared to the end of December 2019.
Similar to Vietcombank, within the past year, Tien Phong Commercial Joint Stock Bank (TPBank) has also actively recruited staff. The number of employees at the bank is currently 6,991 persons, equivalent to an increase of nearly 1,500 employees in one year.
In contrast, Vietnam Prosperity Commercial Joint Stock Bank (VPBank) made the largest staff reduction. More than 4,000 employees of VPBank lost their jobs in H1 2020. The number of employees of VPBank has fallen by nearly 3,800 people in just three months of Q2 2020, equivalent to a reduction of over 1,260 employees a month.
Export Import Commercial Joint Stock Bank (Eximbank), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) and HCM City Development Commercial Joint Stock Bank (HDBank) also lowered the number of employees by 403 to 599 persons in H1 this year.
In fact, the staff reduction of these banks is not only due to the outbreak of Covid-19 epidemic which has indirectly affected the business results of banks, but is also a result of the restructuring process.
Typically, in 2019, despite the staff reduction, VPBank’s parent bank recorded a profit growth of up to 24 percent with a pre-tax profit of 5.835 trillion dong, accounting for nearly 57 percent of the total consolidated profit.
Nguyen Duc Vinh, general director of VPBank explained that the reduction of over 2,000 employees is the result of VPBank’s restructuring. Due to the optimisation of operating processes, application of many new technologies, application of automation, digitalisation, etc., the bank’s productivity has risen sharply. In 2019, VPBank’s revenue grew by more than 30%, while the expenses only increased by six percent.
So, the question is that whether the staff cut would help banks reduce spending and increase salaries and bonuses for their staff?
A survey conducted based on the Q2 financial statements of over 20 joint stock banks showed that in the first two quarters of the year, only three banks offered average salary and allowances of over 30 million dong per month to their employees, including Vietcombank, Vietnam International Commercial Joint Stock Bank (VIB) and Vietnam Technological and Commercial Joint Stock Bank (Techcombank).
Notably, although employees of the above banks have a fairly high income compared to the common income of other commercial banks, their incomes have actually decreased compared to the average of 2019.
Typically, the average salary and allowance of Vietcombank’s employees in H1 2020 was 32.8 million dong per person per month. Compared to the average level in 2019, it is 1.5 million dong per person per month lower.
Techcombank became the leader in average income for employees. In Q1 2020, the average income of the bank’s employees was 37.5 million dong per person per month, but by the end of H1, this number fell to 37 million dong.
Apart from Vietcombank and Techcombank, only VIB is currently paying average salary and allowance of over 30 million dong per employee per month.
Meanwhile, the top banks with employee income of more than 20 million dong are Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), VPBank, Military Commercial Joint Stock Bank (MB), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Saigon Hanoi Commercial Joint Stock Bank (SHB), and Southeast Asia Commercial Joint Stock Bank (SeABank).
Orient Commercial Joint Stock Bank (OCB) and Eximbank are the two banks which pay the lowest average salary and income in the system in H1. OCB’s average salary and income is currently just around 10 million dong per person per month.
Thus, the salaries of banks’ employees in Q2 2020 have started to go down.
However, leaders of many banks said that if the epidemic is not controlled in August, from Q3 2020, its impact will be more obviously seen in banks’ financial statements. Therefore, the profits and employee income of banks will see more fluctuations in the next two quarters.
Previously, due to the Covid-19 pandemic, the SBV had sent a message requesting the banking industry to consider cutting operating costs and salaries and bonuses, not paying cash dividends in order to focus on lowering interests to support businesses facing difficulties caused by the Covid-19 pandemic.
In Q1, although the epidemic had affected the performance of many banks, banks still strived to preserve staff salaries. However, in Q2, since the income of the banking industry showed signs of decline, the employee incomes of some banks have also been affected.
