Banks strengthen "retailing"

	Banks help low-income earners
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	Banks pursue sustainable growth

Banks actively increase their revenues from retail segment

Tendency

According to the 2017 financial market review report from the National Financial Supervisory Commission, banks business profits increased sharply, with many banks announcing profits of trillions. However, revenue from credit activities continued to account for a large proportion of the total revenue from business activities by credit institutions. This is because credit has increased relatively evenly from the first months of the year. Specifically, net interest from credit activities rose by 33.1% compared to 2016, accounting for 79.1% of total net revenue from business activity (76.4% in 2016).

However, in a strategic orientation, banks have expressed their determination to enhance the development of the retail segment in the foreseeable future. Accordingly, retail banks and banking services aim at individual customers instead of corporate customers. The main services of retail banking are savings, payment, consumer loans, credit cards and debit cards. With current conditions and tendency, the retail segment is motivated to grow.

In fact, banks are now trying to develop information technology infrastructure, as well as improve and renovate their services to meet the customers’ needs. Prominent is the promotion of Internet Banking, mobile payment services, card services and consumer lending services and cooperation with insurance companies.

According to a representative of the Bank for Investment and Development of Vietnam (BIDV), BIDV has been developing a comprehensive strategy from expanding its transaction network, transferring into modern distribution channels and developing professional and friendly human resources in charge of retailing, to enhancing the application of information technology in the retail segment in order to continuously increase the customer's experience and strengthen the core value." Customer is the center for all of BIDV’s retail banking activities".

Therefore, in 2017, BIDV has restructured the customer base with the growth of retail customers, small and medium enterprises, foreign enterprises, and gradually reduced the proportion of customers as large enterprises. The number of individual customers has reached over 10 million, up by 14% compared to 2016. Small and medium enterprises have grown 14%, reaching 236,000 customers, accounting for 98% of BIDV’s total corporate customers. In the period 2013-2016, BIDV's retail credit growth rate was 50% per year on average.

Similarly, at the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), the proportion of retail / wholesale credit was 59.2% / 40.8% respectively; while in 2016 this proportion was 66.9% / 33.1%. According to Vietcombank, in 2017, the bank's credit structure has been shifted in the right direction towards expanding retail credit; reducing low effective wholesale debts; increasing retail credit at the transaction office and improving the number of new credit wholesalers.

Massive support

In 2017, with the policy of supporting the production and business activities of enterprises, the Government has instructed credit institutions to facilitate and reduce interest rates. Therefore, the revenue from credit will not have much expectation, especially when the credit risk leading to bad debt is always a concern of the banking system. Therefore, retail development should be the indispensable direction of the system and is receiving massive support for market development as well as management agencies.

The most prominent in the retail segment is consumer credit, in 2017 and in previous years, consumer credit has increased sharply. According to the National Financial Supervisory Commission, consumer credit in 2017 was estimated to increase by 65%, while in 2016 up by 50.2%. This rose the share of consumer credit in total credit growth from 12.3% (2016) to 18% (2017). This was because people were in high demand for loans for buying and repairing houses and buying vehicles. Therefore, in the future, consumer credit is forecasted to be still high and become one of the potential and strategic segments of credit institutions.

In addition, in order to further exploit the retail segment, online banking services have been increasingly upgraded, card payment - non-cash payment has been developed by the Government into projects in order to increase the proportion and help credit institutions to have more opportunities and conditions for development. Along with that, the associated financial products (banking services combined with insurance, securities and gold) have been developed more.

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According to experts, the banking sector could double in the next five years, the key to growth is retail banking service. Vietnam market has enough potential premise and opportunity to develop the retail segment, so that not only domestic banks, but foreign financial companies and credit institutions will also participate, creating fierce competition. Therefore, the sustainable development and the choice of appropriate direction and right segment of customers will be an important task for leaders, the credit institutions, and the whole system