Year 2018 marks the first year in the Vietnam’s banking history that the group of state-owned commercial banks no longer dominates the sector. Some members of group of private banks have risen in the ranking.
In the system, commercial banks having dominant state ownership are classified as state-owned banks. This group includes Commercial Joint Stock Bank for Agriculture and Rural Development (Agribank, not equitised), Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) and three banks which were acquired by the State Bank of Vietnam (SBV) at zero dong.
Meanwhile, banks not having dominant state ownership are often classified as private commercial banks.
With a long history, large scale, and dominant market share, state-owned banks always lead and dominate in terms of profit.
However, from 2018, the business results have been updated and aggregated information showed that the profit ranking has been significantly changed.
For a long time, banks’ profits are often compared by absolute numbers, although this comparison does not make much sense under professional analysis.
Instead, basic indicators such as Return on Asset (ROA) and Return on Equity (ROE) reflect more closely the performance, or indicators such as Capital Adequacy Ratio (CAR), asset quality and bad debts, working efficiency per capita, etc. in order to have a better comparison.
However, comparing the profit scale by absolute number has become a habit. From that, the positions in the “ranking” are defined based in the achieved profit numbers, although the highest number is not necessarily the most effective.
Nevertheless, looking at the absolute numbers, the profit scale of Vietnamese commercial banks has changed significantly with the official dominance of private commercial banks.
With over 18 trillion dong Vietcombank confirmed its first position in profit with a big gap with all other remaining members.
The biggest change in 2018 was in the second position. For the first time in history, the system recorded that BIDV and VietinBank were no longer competitive for this position and had to give up the second position to a private commercial bank.
With data updated to this point, the second position belongs to Vietnam Technological and Commercial Joint Stock Bank (Techcombank). According to findings of VnEconomy, Techcombank exceeded its profit target in 2018 and became the first private joint stock bank to have profit of over 10 trillion dong.
Although official information has not been released by financial statements, it is likely that BIDV and VietinBank have backed down to lower positions.
Notably, the state-owned banks are members having total asset size of more than 1,000 trillion dong and dominant traditional market share. While Techcombank’s total asset size is estimated at less than one third of each member of the group of state-owned banks.
Similarly, despite having much smaller total asset size compared to state-owned banks, the estimated profit of Vietnam Prosperity Commercial Joint Stock Bank (VPBank) still exceeded nine trillion dong.
As VietinBank has not released detailed profit figures in 2018 after strongly adjusted its plan, VPBank is still likely the next major change from the group of private banks with the fourth position, before VietinBank and after BIDV in the ranking.
Thus, in absolute profit alone, the top five in the 2018 profit ranking has changed dramatically from history, with the cases of Techcombank and VPBank.
In the group of private commercial banks, the 2018 profit ranking continues to show the bigger gap among the adjacent members.
In the years of 2011-2015, the general difficult period of the system, Military Commercial Joint Stock Bank (MB) continuously maintained stable profit to hold the leading position in private commercial banks. However, in recent years and until 2018, the ranking has changed dramatically.
Despite exceeding the plan set in 2018, with a major gap, MB is no longer a direct rival of Techcombank and VPBank. This is also a change on the 2018 profit ranking.
Compared to many years ago, the profit positions in the group of private commercial banks until 2018 has changed greatly, when the previous leading members such as Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) and Export Import Commercial Joint Stock Bank (Eximbank) are yet able to regain their positions.
After those changes, it can be forecasted that the profit ranking of Vietnamese banks in 2019 will continue to see changes although the year 2019 has only started.
In 2018, Agribank emerged with a record high profit of above 7.5 trillion dong and will be the notable case to be followed up. Meanwhile, if BIDV soon completes its plan to sell capital to foreign investors, the prospect of a breakthrough can then create a phenomenon in 2019.
For the first time, the profit ranking of Vietnamese banks is no longer separated in group as before. The comparison is now direct with the rise of private commercial banks.
