The current development and future strategies of many local commercial banks are creating confidence about a sustainable growth of the banking sector (Photo: Techcombank)Hanoi (VNA) - The currentdevelopment and future strategies of many local commercial banks are creatingconfidence about a sustainable growth of the banking sector.
Recent assessments by international organisations have shown a bright pictureabout the performance of the banking sector, of which, leading creditorganisations such as Vietinbank, Techcombank, Vietcombank and BIDV haveresumed their momentum and shown good health.
The Asian Banker recently commented that the performance of Vietnam’s bankingsector has continuously improved, thanks to the government’s reform efforts andthe positive movement of the economy. The assessment is based on an analysis ofoperation and ranking of 16 Vietnamese banks, including state-owned banks andjoint stock commercial ones.
According to the Asian Banker, Vietnam’s banking system has shown a positiveperformance, reflected in the country’s highest asset growth rate in the AsiaPacific region. In terms of profits, domestic banks have reached an impressivenet profit growth of 37.4 percent.
Quite a number of recorded indicators have shown a positive development trend.For example, deposit/credit growth rate has boomed, reaching 1.5 times,compared to the same period, while credit growth has maintained at 18 percent.Though interest income still dominated, in the revenue structure of some banks,service fees increased significantly, to approximately 20 percent. Also thanksto good mobilisation and a positive improvement in the operation of businesses,partners of banks, the liquidity of the system has improved very well.
The Asian Banker appreciated bad debt settlement efforts, with the sub-primedebt ratio at just 2.5 percent at the end of 2016, the lowest level in recentyears. The report also praised the increased risk management awareness ofbanks, which most clearly reflected in the compliance with new regulations ofthe State Bank, as well as Basel II standards.
[First Vietnamese bank completes Basel II project]
The Asian Banker has ranked 500 banks in the region with total assets of 224billion USD, and a net profit of 1.6 billion USD. Notably, in terms of StrengthRank (the strongest banks following the asset balance sheet), the top 3 leadingbanks are Vietcombank (No. 48 out of 500 regional banks), Techcombank (No.101)and Vietinbank (No.124).
As such, Techcombank was the only joint stock commercial bank among the Top 3banks with the highest profitability, following the assessment of The AsianBanker. This achievement was thanks to the fact that the bank had implementedgood risk management measures, while having a good asset quality.
In September, the prestigious credit rating agency S&P also ratedVietcombank and Techcombank as equally as Vietnam’s national rating, or“national credit rating ceiling.” This is the highest rating that a Vietnamesebank can achieve (until S&P upgrades its credit rating for Vietnam).
According to S&P’s assessment, Techcombank has “a balanced choice betweenprofit increase and risk management.” In 2017, Techcombank completed its baddebt purchase from the Vietnam Asset Management Company (VAMC) and startedapplying risk management framework under the Basel II international standard.
Assessing the move on bad debt purchase of banks, Pham The Anh, economic expertat the National University, told Dan Tri newspaper there were two noticeablepoints. First, the financial strength of banks allowed them to have abundantresources to acquire bad debt. Besides, the asset quality of loans had improveda lot (which may come from changes in the operation of businesses, in thebank’s accompanying policy and positive movement of the economy).
Expert Can Van Luc believed banks that really do business professionally andgain high credit scores from world prestigious rating institutions wouldmaintain sustainable development and see good business results, taking advantageof opportunities when the economy integrates deeply into the region and theworld. - VNA
VNA
