The first two representatives who met the international standards of Basel II, Vietnam International Commercial Joint Stock Bank (VIB) and Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) have proven that their business performance and risk management are superior to the average level of the banking industry.
The operations at these two banks have shown that investing methodically and applying corporate governance and risk management standards, besides Basel II standards, many years ago, gave them outstanding business results.
ROE (Return on capital) of the two banks is at the highest level in the market, far ahead of the other banks, at over 26%, nearly 70 percent higher than the industry average.
Bad debts are actually at a low level and decrease day by day
According to the banks’ data in the third quarter of 2019 and the data released by the State Bank, the bad debt ratio (including both internal bad debts and bad debts at VAMC) of the whole system was at 4.8 percent while that of Vietcombank and VIB was only 1.1 percent and 1.7 percent respectively.
While the whole system still has more than 225 trillion dong of bad debts sold to VAMC, Vietcombank and VIB are two out of six banks that have cleared their debts at this company.
Capital adequacy ratio (CAR) according to Basel II is high, often over nine percent.
According to Basel II’s regulations, CAR of banks must be at least eight percent, at Vietcombank and VIB, both are above nine percentmuch higher than the regulations. And updated to date, only 17 of the banks operating in Vietnam have met Basel II standards for capital safety.
Vietcombank and VIB are two of few banks that pay cash dividends on a regular basis every year.
Furthermore, there are many banking awards given by various organisations, in which the award by The Banker of the United Kingdom is one of the most prestigious. Both Vietcombank and VIB received awards from this organisation.
Vietcombank is one of the first banks to apply AI technology on the mobile banking platform application with the utility of a virtual assistant, helping customers make transactions easily via message on the VCB applicationMobile [email protected] VCB recently announced a cooperation project with PwC on a digital transformation project. Vietcombank was awarded the “Best Mobile Banking Initiative in Vietnam” by The Asian Banker magazine.
Meanwhile, VIB is also a bank with a strong and effective investment strategy in recent years to develop digital banking and has been recognised by many prestigious international organisations for digital banking solutions such as the award “Vietnam’s excellent digital bank in 2017 and 2018″ by The Asset international magazine.
Both banks are strongly committed to and actively participate in initiatives to promote cashless payments in Vietnam in line with the direction of the government and SBV.
The strategy focuses on retail and centralised risk reduction; retail credit growth leads the market.
Vietcombank is the leading bank in terms of retail loans with a loan balance of over 330 trillion dong on June 30, 2019, accounting for 48 percent of total loans. VIB currently has a retail loan balance of over 100 trillion dong, accounting for 80 percent of total outstanding loans and is ranked among the top three private joint stock banks with the leading retail growth rate.
Both banks saw strong growth in credit card operations, with many prestigious awards for both size and quality.
Foreign strategic shareholders are large-scale global banks.
Both banks have received great support from strategic shareholders since 2011. Both Mizuho and CBA have contributed significantly to corporate governance activities, technical assistance, and training course on key transformation activities for VCB and VIB.
