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Home / Economy / Banking & Finance
Fees and retail banking services to become mainstay of banks in 2018
Ha Thu 14:00, 2018/02/09
Commercial banks expect revenue from fees and retail banking services will become their main income sources this year thanks to rising market demands.
According to Nguyen Duc Vinh, VP Bank general director, after years investing in the financial company FE Credit, his bank estimates to receive a large amount of profit from the company in 2018. 
 
FE Credit made up some 51% of VP Bank’s profits last year
FE Credit made up some 51% of VP Bank’s profits last year
The FE Credit started to gain profits from the retail banking segment in 2016 and the profit was continuously improved last year. VP Bank’s financial reports showed that the bank’s profits last year hit record high of over VND6.43 trillion (US$283.25 million), of which the FE Credit made up some 51%.
Vietcombank also expects to better exploit the potential retail banking segment this year as it last year recruited Thomas William Tobin, a Canadian foreign senior expert in retail banking, to be its retail banking director. It was the first time the State-owned bank appointing a foreigner in its management board, showing its priority for the retail banking segment.
Vietcombank’s chairman Nghiem Xuan Thanh hoped that the expert, who is expertise in global and Vietnamese finance, will help the bank make a leap in the retail banking segment. 
Vietcombank targets to become the country’s leading bank in retail segment in 2020, Thanh said.
According to Nguyen Dinh Tung, general director of the Orient Commercial Joint Stock Bank, his bank is expected to earn a pre-tax profit of more than VND1 trillion in 2018, thanks to specific strategies in sales of financial products, especially in non-credit services.
Some other banks have also planned to better exploit the potential business segment in 2018 through mergers and acquisitions (M&A) last year. Typically, Shinhan Bank Vietnam acquired ANZ’s retail banking services or the Vietnam International Bank (VIB) acquired the Ho Chi Minh City’s branch of Commonwealth Bank of Australia.
According to experts, banks are investing significantly in retail banking services instead of only focusing on corporate lending in the hope of gaining higher profits from the potential segment this year.
With more than 93 million people and sharply increasing consumption, Vietnam is considered a hot destination for the retail banking segment, which is why banks have strategically planned to boost the segment.
In fact, the in-cash habit of Vietnamese people is no longer an obstacle to the development of card network and non-credit services. Thus, several banks are aiming to bring customers a variety of non-traditional credit services, such as savings and transactional accounts, mortgages, personal loans, debit and credit cards.
Notably from the beginning of this year, many banks have considerably improved the quality of retail banking services to enhance competitiveness in the market. They are also focussing on other aspects such as marketing, technology and human resources to attract more individual customers to non-credit services.
The move was decided after the retail banking segment contributed to a large amount of the total profits of many banks last year. BIDV and MB Bank, for example, gained high profits last year, thanks to a 34-35% rise in retail banking services.
Nguyen Thanh Nhung, general director of VietBank, said retail banking services would be a key to make a sustained and stable profit for the banking sector this year. The development of non-credit services contributes to diversifying bank’s services, thereby bringing more customers. This type of service would also disperse risks and create higher profits for commercial banks, said Nhung.
According to Tran Du Lich, a member of the National Financial and Monetary Policy Advisory Council, banks currently not only gain profits from lending but also live on retail segment, so the move to invest in retail services is inevitable in the future.
Based on the results gained, leaders of commercial banks said they would continually apply this business strategy, with a focus on retail banking services next time.
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