VietinBank, MB, Techcombank’ off-balance sheet outstanding balance reach over VND10 trillions

24-Jul-2021 Intellasia | NDH | 5:02 AM Print This Post

In the update report on the banking industry, ACB Securities Company (ACBS) mentioned that the non-interest income will continue to grow significantly and contribute to banks’ profits. The non-interest income of banks in ACB’s watchlist has grown at a compound rate of 25.6 percent over the past eight years.

ACBS said that the revenue from off-balance sheet debt collection is a notable item in the coming years. After the process of setting up provisions and writing off bad debts in the period of 2015 2020, the off-balance sheet debts of banks are currently very high. ACBS estimated that by the end of 2020, the off-balance sheet debts were about 20 trillion dong in Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), 19 trillion dong in Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), about 13 trillion dong in Military Commercial Joint Stock Bank (MB) and 10 trillion dong in Vietnam Technological and Commercial Joint Stock Bank (Techcombank).

ACBS expected the income from services to continue growing well in the long term thanks to three factors. The first factor is the development of the economy accompanied by the growth of domestic trade and import and export activities, which will boost the service income of banks from trade finance activities and international payments.

Although many banks are currently offering free online transactions to change consumer behaviour, in the future, this will be a great potential source of revenue when the online payment trend is growing very strongly in Vietnam, according to ACBS.

The second factor is that Vietnam’s life insurance market still has a lot of room for growth as the proportion of the population having life insurance was only 11 percent as of late 2020. Therefore, the income from insurance distribution commissions will increasingly contribute to service income.

Some banks such as Asia Commercial Joint Stock Bank (ACB), VietinBank and Maritime Commercial Joint Stock Bank (MSB) will start recording upfront fees from exclusive insurance agreements from 2021.

The third factor is the growth potential of the stock market, which can help income from brokerage, proprietary trading and securities underwriting activities to develop positively in the coming years.

As for other non-interest income, ACBS said that the profit from securities trading of some banks is likely to decline because the government bond yields can hardly continue to fall as deeply as in the period of 2018 2020. Therefore, it will be difficult for banks to continue to record profits from securities trading as in this period.

 

Category: Finance, Vietnam

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