Out of 13 banks releasing their financial statements for Q1/2020 in April, the banks with the highest absolute profit in the system were ones having improved the retail lending robustly in the period 2017-2019, such as Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), Tien Phong Commercial Joint Stock Bank (TPBank), Vietnam International Commercial Joint Stock Bank (VIB), etc.
The momentum of development had not stopped
According to the SSI Securities Corporation, the trend of focusing on retail lending had appeared and developed strongly among the commercial banking system in recent years. Among the 13 largest listed banks, the proportion of retail loans to total balance increased from 32.2 percent in 2017 to 35.5 percent in 2018 and reached over 40 percent at the end of 2019.
In fact, out of 13 banks releasing their financial statements for Q1/2020 in April, the banks with the highest absolute profit in the system were ones having improved the retail lending robustly in the period 2017-2019, such as Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), Tien Phong Commercial Joint Stock Bank (TPBank), Vietnam International Commercial Joint Stock Bank (VIB), and so on. For example, Vietcombank’s individual credit grew from 32.7 percent in 2017 to 36.9 percent in 2018 and reaching 42 percent by the end of Q3/2019. In the period 2020-2022, Vietcombank’s individual lending was expected to continue to grow strongly, and the proportion of individual loans would account for about 65 percent of total balance by 2025.
At Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), thanks to the sharp shift in the retail segment, balance to individual customer groups of BIDV during the period from 2014 to 2018 had an average growth of 40 percent per year. By the end of 2018, the retail loans accounted for 34.1 percent of BIDV’s total balance, while by the end of 2019, which rose to 34.5%, still drawing an upward line.
At Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), the retail segment had also had a mighty breakthrough. Outstanding loans for individuals increased by an average of nearly 35 percent per year between 2017 and 2019. The proportion also accounted for over three percent of total outstanding loans by the end of 2019.
In the group of joint-stock commercial banks, many banks, such as VPBank, HCM City Development Joint Stock Commercial Bank (HDBank), TPBank, Military Commercial Joint Stock Bank (MB, VIB, and Asia Commercial Joint Stock Bank (ACB), had substantial retail credit growth. In 2019, the net income margin (NIM) of many banks improved thanks to the growth of retail credit, including consumer finance, personal credit, and microenterprise.
According to VIB, in 2019, loans to individual customers and microenterprises of the bank reached nearly 110 trillion dong, increasing by 46 percent and accounting for 82 percent of the bank’s total balance. While at VPBank with the contribution of FE Credit, consumer loans accounted for 57 percent of total loans and created a substantial competitive advantage in the system.
Upgrade retail model
According to Vietcombank’s retail banking representative, from the beginning of 2019 to become the leading retail bank in the system by 2025, this bank had cooperated with BCG consultancy (USA) to develop the project named ‘Changing retail banking operating model RTOM.’ Accordingly, the unit had established a retail banking conversion team with more than 70 senior members from departments, professional centers, and gathered 126 initiatives from the Vietcombank branch system nationwide to deploy the component of the project.
Vietcombank said that by the end of 2019, the design phase of the RTOM project had completed with the contents of the enormous model transformation. Currently, the unit had started to carry out phase two of the project with the addition of a coordinator (SA) and an individual consultant position (PBO) in the transaction offices of branches. Vietcombank’s record showed that, after piloting the customer support model at the counter applied in some branches, the queuing time automatically decreased on average from three minutes to five minutes per time. Customer satisfaction was assessed at the maximum level (4.9 points per 5 criteria).
Meanwhile, other commercial banks were also renewing the retail banking technology system, improving the transaction support model, and increasing retail credit products to meet capital needs and improve customer satisfaction, also not inferior.
For example, BIDV had applied absolute synchronisation of online applications on Internet Banking, Mobile Banking, SMS Banking, Web Chat, Facebook, YouTube, and even smartwatches (Apple Watch). Recently, the bank had built self-service channels (e-zone) at the transaction office, at the same time, deploying some innovative products with partners such as Samsung Pay, QR Pay, Chat-bot on Mobile Banking application, Swift GPI, ATM withdrawals on phones. The innovation of this model, according to BIDV, had helped the system develop about 20 types of credit products and services in the retail segment. The retail credit scale was 360 trillion dong (2019), with about 12 million individual customers, including more than 7 million customers in the digital banking segment.
In parallel, Vietnam Maritime Joint Stock Commercial Bank (MSB), Bao Viet Joint Stock Commercial Bank (BaoVietBank), intending to bring retail sales growth to 40 percent in 2020, had made efforts to invest in a range of digital technologies and expand their products in individual credit. The representative of MSB’s retail division also shared that this year, the bank would take full advantage of the 7 trillion dong credit package designed for individual and mortgage customers to boost retail sales growing at 40%. To achieve this goal, MSB had coordinated with a consulting firm, Mc Kinsey, to devise a new business strategy for the period from 2019 to 2023. In which the bank would spend 30 percent of the retail segment resources cooperating with strategy digital banking and Fintech partners to establish digital products in the retail segment.
