Banks increase non-interest revenue

VCN - Slow credit demand and fierce competition have forced banks to seek ways to increase non-interest revenue, especially when there is a lot of support from the digital transformation of the entire banking system.
Continue to handle cross-ownership in banks Continue to handle cross-ownership in banks
Exchange rate fluctuations bring huge profits to many banks Exchange rate fluctuations bring huge profits to many banks
Banks increase non-interest revenue
Many banks have diversified their revenue sources and promoted cross-selling of products and services. Photo: LPBank

Many pressures on revenue

In the first 9 months of 2024, the group of banks leading in profit has focused on increasing the ratio of non-term deposits (CASA) to help reduce operating costs, resulting in positive credit growth. The group of medium and small-sized banks has also reduced operating costs, increased non-interest income from expanding and diversifying products and services, meeting customer requirements...

However, there are also many banks having a decline in profits. The main reason is low credit growth, along with insufficient revenue from services.

In general, from the financial statements of 29 banks in the first 9 months of 2024, total net interest income reached more than VND 378.7 trillion, an increase of 15.8% compared to the first 9 months of 2023. 25/29 banks recorded an increase in total income of net interest in the past 9 months. Regarding net interest from service activities, the financial statements of 29 banks recorded more than VND 46.7 trillion, a slight increase of 3% compared to the same period last year. Net interest from services contributed about 10% to the total operating income of banks.

The above figures show that net interest income is more than 8 times higher than service income. Moreover, from the end of 2023, the service segment will no longer contribute significantly to banks' non-interest income because major service revenue sources such as insurance, bond insurance guarantee... are all facing difficulties.

The recent Banking Industry Update Report by SSI Securities Company (SSI Research) shows that credit demand is still slow and fragmented, forcing banks to apply many preferential loan packages with low interest rates. Moreover, fierce competition among banks makes it difficult to increase lending interest rates while deposit interest rates are gradually increasing.

In addition, bank profits were also affected by the lack of improvement in other business activities, with net fee income decreasing by 18.6% compared to the previous quarter. Income from foreign exchange and securities trading activities weakened in the third quarter of 2024, decreasing by 54.4% compared to the second quarter of 2024.

Calculating to increase non-interest revenue

Despite external pressure and difficulties, considering each bank, some banks still have strong growth in non-interest income, becoming a bright spot in overall business results. Many banks are making efforts to boost non-interest income through digital transformation.

LPBank is the bank that recorded the strongest increase in service income, more than 4 times higher than the same period from VND 640 billion to VND 2,701 billion. According to LPBank, this result is thanks to diversifying revenue sources, promoting cross-selling of products and services such as foreign currency trading services, remittances, import-export, money transfer… helping the proportion of non-credit income to total income increase significantly from 13.98% to 23.64%.

NCB also reported net profit from services nearly 3 times higher than the same period last year, reaching VND 63 billion. According to NCB, from 2023 to present, NCB has invested heavily in infrastructure and technology solutions. In particular, in 2024, NCB cooperated with the world's leading technology partners to implement highly complex digital transformation projects. As of September 30, 2024, NCB has reached a scale of more than 1.24 million customers, equal to 160% of the annual plan and a growth of 24.22% compared to the end of 2023.

SSI Research's report forecasts that the profit margins of banks in the fourth quarter of 2024 will still face pressure and continue to narrow in the last 3 months of the year. Moreover, the market still has some potential credit risks related to loans for buying house, real estate investors and the renewable energy industry. However, SSI Research estimates that the growth in pre-tax profit of the whole industry will reach 14.5% in the fourth quarter of 2024 and reach 13.3% for the whole year of 2024.

This growth will be further contributed to when the banking system's non-interest income increases sharply due to objective factors. For example, according to analysis by experts from VPBankS Securities Company, the State Bank's regulation allowing banks to cross-sell investment-linked insurance products will come into effect, helping to unblock the insurance market, thus, fee income from insurance-banking linkage activities will recover. In addition, income from bad debt settlement is also expected to be more positive than the same period, which will contribute more to the banks' non-interest income.

Therefore, experts and banks believe that it is necessary to continue calculating to increase non-interest income with many solutions, in which, management agencies should have support to promote banks in digital transformance to increase competitiveness and attract users.

By Huong Diu/ Binh Minh

Related News

A “picture” of bank profits in the first nine months of 2024

A “picture” of bank profits in the first nine months of 2024

VCN - Pre-tax profits for banks during the first nine months of 2024 remained positive, exceeding 200 trillion VND, solidifying the sector's position as a market leader.
Stipulate implementation of centralized bilateral payments of the State Treasury at banks

Stipulate implementation of centralized bilateral payments of the State Treasury at banks

VCN - The Ministry of Finance (MOF) gathers feedback on the draft Circular regulating the management and use of accounts of the State Treasury opened at the State Bank of Vietnam (SBV) and commercial banks.
How does the Fed

How does the Fed's interest rate cut affect Vietnam?

VCN - In the latest meeting of the Federal Open Market Committee (FOMC), the Fed decided to cut interest rates by 50 basis points to a range of 4.75%-5%. Analysts have given different perspectives on this decision.
Bank profits improve but there are no expectations

Bank profits improve but there are no expectations

VCN - According to assessments of credit institutions, the overall business situation and pre-tax profit of the banking system in the second quarter of 2024 has improved but is not really clear in the first quarter. and did not meet expectations.

Latest News

Credit growth target of 15% for 2024 within reach: SBV

Credit growth target of 15% for 2024 within reach: SBV

The banking system's credit growth had risen by 11.12% as of November 22 compared to the end of 2023, hence the 15% growth target for the whole year is reachable, according to the State Bank of Vietnam (SBV).
Multiple drivers propel positive growth in budget revenue

Multiple drivers propel positive growth in budget revenue

VCN - Dr. Bui Dang Dung, former Deputy Chair of the National Assembly’s Finance and Budget Committee, believes that the 2024 state budget revenue results are highly encouraging, reflecting the concerted efforts of the Government, relevant agencies, and the business community amid challenging economic conditions.
Drastic measures needed to accelerate disbursement of foreign-funded public investment

Drastic measures needed to accelerate disbursement of foreign-funded public investment

Drastic measures are needed to remove roadblocks and accelerate the disbursement of foreign-funded public investment in the remaining months of this year, as the disbursement rate remains far below the target of 95 per cent, according to the Ministry of Finance.
Urging collection of land-related revenues in the last month of the year

Urging collection of land-related revenues in the last month of the year

VCN – In order to achieve the highest revenue target in the last month of 2024, creating momentum for the good implementation of socio-economic development tasks in 2025 and the period 2026 - 2030, the Prime Minister assigned the Ministry of Finance to promote revenue management solutions, strictly control tax assessment, tax declaration, tax payment, and collect arising revenues, especially revenues related to land.

More News

Innovation and restructuring of state-owned enterprises: Start from institutions

Innovation and restructuring of state-owned enterprises: Start from institutions

VCN - The work of restructuring and innovating state-owned enterprises (SOEs) has had remarkable results in reducing quantity and improving quality, but is still behind schedule and the effectiveness is not commensurate with the resources.
Tax policies facilitate business development

Tax policies facilitate business development

VCN - Sharing with Customs News on the sidelines of the Tax and Legal Forum 2024 recently held, Deputy General Director, General Department of Taxation Dang Ngoc Minh (photo) said that the Government is researching and implementing new tax policies to support and facilitate business development in the time to come.
Tax sector exceeds revenue target 2024

Tax sector exceeds revenue target 2024

VCN – Currently, the revenue managed by the Tax sector has reached VND1,538,000 billion, exceeding the 2024 estimate. This positive result was said by the leader of the General Department of Taxation at the Finance Forum “Financial policies to promote aggregate demand for economic development”.
Stimulate production and business, submit to the National Assembly to continue reducing 2% VAT

Stimulate production and business, submit to the National Assembly to continue reducing 2% VAT

VCN - Reducing value added tax (VAT) has an impact on the decrease of state budget revenue but also stimulates production and promotes business activities, thereby contributing to creating more revenue for the state budget.
M&A in Vietnam expected to be bustling in 2025

M&A in Vietnam expected to be bustling in 2025

Merger and acquisition (M&A) activity in Vietnam is expected to be bustling again, thanks to the domestic economic recovery and higher foreign investment.
Major reforms in the management of state capital in enterprises

Major reforms in the management of state capital in enterprises

VCN - The draft Law on Management and Investment of State Capital in Enterprises is set to be presented and discussed at the National Assembly, featuring numerous new provisions after multiple rounds of public consultation. The draft law is expected to bring significant reforms to the operational framework for managing state capital and state-owned enterprises (SOEs).
Vietnam makes comprehensive strides in public financial management reform

Vietnam makes comprehensive strides in public financial management reform

VCN - Vietnam has achieved significant milestones in its public financial management (PFM) reforms, earning praise for its comprehensive progress across multiple areas, according to the latest Public Expenditure and Financial Accountability (PEFA) Report.
Central bank increases credit growth limit for banks for second time this year

Central bank increases credit growth limit for banks for second time this year

The State Bank of Vietnam (SBV) on November 28 announced it would increase credit growth target for credit institutions, for the second time this year.
Decree on the implementation of global minimum tax: Ensuring a clear and transparent legal framework

Decree on the implementation of global minimum tax: Ensuring a clear and transparent legal framework

VCN - The decree detailing the implementation of the global minimum tax must align with practical management requirements, ensuring a clear and transparent legal framework that enables businesses to comply with new tax regulations while safeguarding national interests, emphasized Dang Ngoc Minh, Deputy Director General of the General Department of Taxation.
Read More

Your care

Latest Most read
Credit growth target of 15% for 2024 within reach: SBV

Credit growth target of 15% for 2024 within reach: SBV

The banking system's credit growth had risen by 11.12% as of November 22 compared to the end of 2023, hence the 15% growth target for the whole year is reachable, according to the State Bank of Vietnam (SBV).
Multiple drivers propel positive growth in budget revenue

Multiple drivers propel positive growth in budget revenue

Dr. Bui Dang Dung believes that the 2024 state budget revenue results are highly encouraging, reflecting the concerted efforts of the Government, relevant agencies, and business community amid challenging economic conditions.
Drastic measures needed to accelerate disbursement of foreign-funded public investment

Drastic measures needed to accelerate disbursement of foreign-funded public investment

Drastic measures are needed to remove roadblocks and accelerate the disbursement of foreign-funded public investment in the remaining months of this year, as the disbursement rate remains far below the target of 95 per cent, according to the Ministry of Finance.
Urging collection of land-related revenues in the last month of the year

Urging collection of land-related revenues in the last month of the year

VCN - Since the beginning of 2024, the macro-economic situation has been stable, growth has been promoted, major balances of the economy have been ensured, and the state revenue in the first 11 months of the year has reached 106.3% of the estimate.
Innovation and restructuring of state-owned enterprises: Start from institutions

Innovation and restructuring of state-owned enterprises: Start from institutions

The work of restructuring and innovating state-owned enterprises (SOEs) has had remarkable results in reducing quantity and improving quality, but is still behind schedule
Mobile Version