Many banks still want to open more transactions points to increase brand coverage and reach new customers. Meanwhile, some other are more reserved and look for new ways of doing things.
According to statistics gathered from more than 20 banks, Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) made a strong impression with an addition of 161 transaction points in 2018 by converting postal transaction points into banking transaction points. The bank is currently having 388 transaction points, nearly 1,400 operating postal transaction points which will continue to be converted in the future.
However, LienVietPostBank is a special case as it merged with Postal Savings Service Company and the conversion is included in the roadmap. The largest network expansion belongs to HCM City Development Commercial Joint Stock Bank (HDBank). In 2018, the bank opened five new branches and 40 transaction offices, increasing the total number of transaction points to 285 units. The bank’s number of consumer finance transaction points also increased by 2,323 units to 13,825 units, continued to lead the entire consumer finance segment in terms of network scale.
Small-scaled bank Nam A Commercial Joint Stock Bank (NamABank) is the next one to be mentioned as in 2018 it was approved to expand network by 35 transaction points nationwide including five branches and 30 transaction points.
Some other banks also actively established new transaction points in 2018, such as Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Kien Long Commercial Joint Stock Bank (Kienlongbank) with 17 new units, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) with 14 new units, Vietnam Thuong Tin Commercial Joint Stock Bank (Vietbank) and Tien Phong Commercial Joint Stock Bank with 11 new units. Most of the remaining banks expanded their network in a smaller scale of less than 10 branches and transaction points.
The order in network scale of banks in the end of 2018 generally saw not much change compared to the end of 2017. The biggest change is mainly seen in LienVietPostBank when it jumped to the 6th position, surpassing numerous banks such as Saigon Commercial Joint Stock Bank (ACB), Maritime Commercial Joint Stock Bank (MSB), HDBank, Military Commercial Joint Stock Bank (MBBank), Saigon Hanoi Commercial Joint Stock Bank (SHB), Vietnam Technological and Commercial Joint Stock Bank (Techcombank), and Asia Commercial Joint Stock Bank (ACB). Meanwhile, the group of state-owned banks continued to take the lead in the number of transaction points. However, in this group, the number of transaction points of Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) is currently much smaller (one fourth) than that of Commercial Joint Stock Bank for Agriculture and Rural Development (Agribank) and of BIDV and Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) (only a half).
The large transaction network helps banks access many customer segments in different regions. In localities which are not cities, the presence of banks is very limited and many local people have never accessed to banking and finance services. That is why many banks still want to raise their transaction points to increase coverage and attract new customers.
Nevertheless, in fact, the large network does not always bring high profits, and many banks still have impressive profits despite having less transaction points. For example, TPBank has only about 75 transaction points but attained profit of above 2.2 trillion dong in 2018, higher than banks with larger network such as Sacombank and SHB, etc. for Vietcombank, the bank recorded the highest profit in 2018 with a network of just 500 transaction points, less than half of VietinBank’s and BIDV’s, and less than one fourth of Agribank’s.
Opening a new transaction point is not easy in the current context, considering the costs and the ability to operate effectively of the branch/ transaction office, in addition to the strict conditions from the State Bank of Vietnam (SBV).
For example, at HCM City Development Commercial Joint Stock Bank (HDBank), Viet Dragon Securities Company (VDSC) said that since most branches and transaction offices of the bank were established in the second half of the year, the increase of operating costs in that year may not be reflected in operating costs and from 2019, along with the plan to establish 25 new branches, VDSC said that the pressure on the bank’s operating costs will go up. Certainly, these investments will bring about service income and the Current Account Savings Account (CASA) is also expected to be improved.
For LienVietPostBank, the profit decline in 2018, according to the bank, was partly due to the desire to focus on network development and modernisation. The number of postal transaction offices and branches and converted transaction offices in 2018 was half of the number of branches and transaction offices established by the bank in the previous nine years.
At some banks, some branches and transaction offices have been closed in the recent time. For example, in 2018, the SBV approved Saigon Commercial Joint Stock Bank (SCB) to terminate its operation in two southern regional branches to serve the bank’s network restructuring. SCB is currently having nearly 240 branches and transaction network nationwide.
Vietnam Technological and Commercial Joint Stock Bank (Techcombank) has also recently made announcement about the termination of Nam An Khanh transaction office.
Meanwhile, Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) is also reviewing the operation efficiency of its branches. VietinBank currently has more than 1,100 transaction points, including 157 branches, unchanged in the past year. Its network is the second largest in the system. VietinBank’s leader once shared that the re-planning of VietinBank’s network is in the restructuring plan in 2016 2020 period, and the bank is reviewing, evaluating and considering cutting down inefficient and less efficient transaction points or will merge some transaction points together to achieve higher performance.
It can be seen that compared to the past years, most banks are quite cautious about expanding network, particularly in rural areas. The reason lies in the cost issue. It is not easy to open a transaction office in rural areas. Not only the cost is high, the revenue is also fairly low compared to the transaction office in urban areas. Therefore, many banks have come up with new ways to optimise efficiency.
Typically, in 2018, Agribank launched numerous mobile transaction points in provinces and cities to serve customers in remote areas. With 68 mobile transaction points by specialised cars, the transaction revenue reached up to 3.5 trillion dong. In this way, Agribank can reach a large number of customers in many rural areas where transport is not favourable, and building a banking transaction office is very difficult and costly. According to Agribank, by doing so, the bank can contribute to curbing black credit and develop non-cash payment for people. Agribank is currently having the largest trading network with more than 2,200 branches and transaction offices nationwide.
