Raising banks’ brand value important

03-Mar-2021 Intellasia | Thoi bao Ngan hang | 5:02 AM Print This Post

The world’s leading brand valuation firm Brand Finance has announced the ranking of the 500 largest global banks in 2021 (Brand Finance Banking 500). Nine Vietnamese banks were included in this list and all recorded improvement in their rankings. In particular, Agribank gained the highest position of 173th on the global ranking, up by 17 steps compared to the 190th position in 2020; followed by Vietcombank, VietinBank, VPBank, BIDV, Techcombank, MBBank, Sacombank and ACB. Especially, VietinBank entered the list with a brand value increase of 55.8%. The selection, valuation and ranking of banks in 2020 was based on the criteria of market share, growth rate, asset size, financial capacity, operational efficiency as well as reputation.

Year 2020 was a difficult year for all sectors and industries across the globe due to the strong impact of the Covid-19 epidemic. However, Vietnam was really successful in coping with the Covid-19 epidemic, natural disasters as well as maintaining macroeconomic balances. Vietnam is one of the few countries recorded positive growth in 2020.

This is firstly thanks to the role of the State Bank of Vietnam (SBV). Accordingly, the maintenance of a positive, active and flexible monetary policy has contributed to controlling inflation according to target, creating conditions to pull interest rates down, stabilising the exchange rate, supporting businesses and people. Particularly, in 2020, the SBV issued many regulations and policies to improve the operating capability, keeping the safety for credit institutions in Vietnam. These factor have partly helped credit institutions in Vietnam to enjoy credit rating upgrade by international rating organisations. Many criteria reached the ceiling limit although businesses have considerably influenced by the Covid-19. In which, Brand Finance’s rating is an example.

Sharing more about this, an expert acknowledged that after the recent restructuring period, credit institutions have really changed, their financial capacity has continuously been strengthened, serving well the bank credit needs of the economy. Accordingly, the total assets of credit institutions by the end of December 31th 2020 were 13,180 trillion dong, 1.6 times higher than 2016, equivalent to 2.2 times of the GDP growth, and accounted for about 66 percent of the assets of the financial system.

The banking system is the main capital mobilisation and distribution channel of the economy. in particular, four state-owned banks (including Agribank, Vietcombank, BIDV and VietinBank) have promoted their key role in leading and regulating the market with total assets accounting for 41 percent of the entire system (5,422 trillion dong), their charter capital accounted for 20 percent of the system (155.248 trillion dong). The banking system of Vietnam stood firmly and did not drop much during the Covid-19 epidemic thanks to the maintenance of good liquidity.

If can be affirmed that enhancing brand value is the goal that Vietnamese banks all target to not only affirm their brand at home, but also expect to be able to compete in the regional and national markets. The development strategy of Vietnam’s banking industry to 2024, with a vision to 20230 also targets to have at least two to three banks in the top 100 largest bank in Asia (in terms of total assets) and three to five banks list their stocks on foreign stock markets in the period of 2021 2025.

According to Dr Chau Dinh Linh, the brand credit rating of a unit often focuses on three factors including the macro economy, the assessment of the entire banking industry, and the assessment of the rated unit. It shows that the upgrade of a bank is very closely related to the national and industry credit ratings. A bank’s credit rating can hardly be higher than the national credit rating, but if the internal situation of each bank is strengthened, it can confirm the resistance against many abnormal developments of the economy in the domestic as well as in the world (typically the Covid-19 epidemic). Through the improvement of Return on Assets (ROA), Return on Equity (ROE), Capital Adequacy Ratio (CAR), risk management, etc., the brand value of a bank will be much more appreciated. Particularly, the implementation of the Basel II standards is one of the bases for banks to improve their health, enhance their reputation in the international integration trend, seizing the opportunities for breakthrough development of Vietnam in the near future.

Many experts also agreed that the proactive self-assessment of the health, financial capability, and governance capacity will help each credit institutions understand its strengths and weaknesses to promote the advantages and make appropriate improvements enhance the value of its brand name, before being ranked by the SBV. It should be added that to improve the credit rating of the Vietnam’s banking system, the quality of the credit information database is also particularly important. This requires a complete legal framework for credit information operations of the SBV, along with the expansion of objects as well as the sources of information collection, the promotion of information technology, the improvement of the processes of data collection and processing, etc.

 

Category: Finance, Vietnam

Print This Post

Leave a Reply

You must be logged in to post a comment.