FiinResearch - Vietnam Banking Report 2021

FiinGroup Joint Stock Company
Head Office
10th Floor, Peakview Tower
36 Hoang Cau, Dong Da
Hanoi, Vietnam
Tel: +84 (24) 3562 6962
www.fiingroup.vn
Ho Chi Minh CityBranch
3rd Floor, Profomilk Plaza Bldg, 51-53 Vo
Van Tan, Ward 6, District 3, Ho Chi Minh,
Vietnam
Tel: +84 (28) 3933 3586
Date: Oct 22, 2021
Dear Our Valued Clients,
Re: The publication of Vietnam Banking Report 2021
FiinResearch, the market research and consulting division of FiinGroup,
is pleased to present our Vietnam Banking Report 2021. So far,
FiinGroup has been publishing annually updated Vietnam Banking Report
for six years, providing the most comprehensive and insightful reports
on the sector.
In addition to the comprehensive analysis of the market, we updated
Vietnam Banking Report this year with emphasis on the impact of the
COVID-19 pandemic on credit growth, asset quality, earning quality and
operational efficiency of the whole banking sector as well as individual
banks. In-depth analysis of key development trends and regulatory
framework in the sector are also covered in the report.
During the research work, leveraging on our extensive business network,
we have conducted various discussions with key industry players to
capture the in-depth sector insights, market situation and performance.
We understand that this is a targeted but also an open study. We would be
happy to provide further information to address any questions that you
may have on the report.
Should you have any questions, please contact me or our lead analyst of
banking sector, Ms. Oanh Tran at +84 (24) 3562 6962 (ext. 120) or her
email: oanh.trankieu@fiingroup.vn.
Yours sincerely,
Le Xuan Dong
Director, Head of Research and Consulting Services (“FiinResearch”)
FiinGroup Joint Stock Company
2

TABLE OF CONTENTS
PART CONTENT PAGE PART CONTENT PAGE
What's new in this report 6 3. Key development trends in financial
61
1. Review of banking sector 8 3.1 Digital transformation in banking sector 62
1.1 Credit growth 9 3.2 Recent development in non-bank financial 65
1.2 Deposit growth & funding structure 16 3.2.1 Consumer finance 66
1.3 Liquidity 22 3.2.2 Product trend: Buy now pay later 67
1.4 Asset quality 25 3.2.3 Corporate bond market 70
1.5 Capital adequacy 35 3.3 M&A and sector consolidation 73
1.6 Earnings quality 37 4. Major Policy and Regulatory Framework 76
1.7 Operation efficiency and profitability 43 4.1 Policy responses to the COVID-19 pandemic 77
1.8 Outlook 47 4.2 Updated regulations on banking sector 78
2. In-depth analysis on selected banks 49 5. Macroeconomic updates 80
6. Appendices 83
3

Abbreviations
4
No Word Stands for
1 1H First half
2 1Q First quarter
3 2Q Second quarter
4 3Q Third quarter
5 4Q Fourth quarter
6 8M Eight months
7 9M Nine months
8 ABB An Binh Commercial Joint Stock Bank
9 ABO Asia Bond Online
10 ACB Asia Commercial Joint Stock Bank
11 ADB Asian Development Bank
12 AGRB Vietnam Bank for Agriculture and Rural Development
13 AI Aritificial intelligence
14 API Application Programming Interface
15 ATM Automated Teller Machine
16 AWS Amazon Web Services
17 BAB Bac A Commercial Joint Stock Bank
18 BID Bank for Investment and Development of Vietnam
19 bn Billion
20 BNPL Buy now pay later
21 BVB Viet Capital Joint Stock Commercial Bank
22 CAGR Compounded Annual Growth Rate
23 CAR Capital Adequacy Ratio
24 CASA Current Account Savings Account
25 CF Consumer Finance
No Word Stands for
26 CI Credit Institution
27 CIR Cost-to-Income Ratio
28 CTG Vietnam Joint Stock Commercial Bank for Industry and Trade
29 EIB Vietnam Commercial Joint Stock Export Import Bank
30 E-KYC Electronic know your customer
31 FDI Foreign Direct Investment
32 FII Foreign Indirect Investment
33 Fincos Finance Companies
34 FOL Foreign Ownership Limit
35 GDP Gross Domestic Product
36 GSO General Statistics Office of Vietnam
37 HCMC Ho Chi Minh City
38 HDB Ho Chi Minh Development Joint Stock Commercial Bank
39 HNX Hanoi Stock Exchange
40 HOSE Hochiminh Stock Exchange
41 IIP Index of Industrial Production
42 IMF International Monetary Fund
43 JSCB Joint-Stock Commercial Bank
44 JV Joint Venture
45 KLB Kien Long Commercial Joint Stock Bank
46 LDR Loan to Deposit Ratio
47 LHS Left-hand side
48 LLP Loan loss provision
49 LLR Loan loss reserve
50 LPB Lien Viet Post Joint Stock Commercial Bank

Abbreviations
5
No Word Stands for
51 M&A Mergers & Acquisitions
52 MBB Military Commercial Joint Stock Bank
53 MLT Medium and Long Term
54 mn Million
55 MOF Ministry of Finance
56 MoM Month-over-month
57 MPI Ministry of Planning and Investment
58 MSB Vietnam Maritime Commercial Joint Stock Bank
59 N/A Not available
60 NAB Nam A Commercial Joint Stock Bank
61 NAPAS National Payment Corporation of Vietnam
62 NFSC National Financial Supervision Commission
63 NIM Net Interest Margin
64 NPL Non-performing Loan
65 NVB National Citizen Commercial Joint Stock Bank
66 OCB Orient Commercial Joint Stock Bank
67 OMO Open market operations
68 p.a. per annum
69 PGB Petrolimex Group Commercial Joint Stock Bank
70 PMI Purchasing Managers Index
71 POS Point of Sales
72 QoQ Quarter over quarter
73 RHS Right-hand side
74 ROA Return on Asset
75 ROE Return on Equity
No Word Stands for
76 SBV State Bank of Vietnam
77 SCB Saigon Joint Stock Commercial Bank
78 SG&A Selling, general & administrative
79 SGB Saigon Bank for Industry and Trade
80 SHB Saigon Hanoi Commercial
81 SME Small and Medium-sized Enterprises
82 SOCB State-Owned Commercial Bank
83 SOE State-owned enterprise
84 SSB Southeast Asia Commercial Joint Stock Bank
85 ST Short-term
86 STB Sai Gon Thuong Tin Commercial Joint Stock Bank
87 TCB Vietnam Technological and Commercial Joint Stock Bank
88 TOI Total Operating Income
89 TPB Tien Phong Commercial Joint Stock Bank
90 trn Trillion
91 VAB Vietnam Asia Commercial Joint Stock Bank
92 VAMC Vietnam Asset Management Company
93 VBB Vietnam Thuong Tin Commercial Joint Stock Bank
94 VBMA Vietnam Bond Market Association
95 VCB Bank for Foreign Trade of Vietnam
96 VIB Vietnam International Commercial Joint Stock Bank
97 VPB Vietnam Prosperity Joint Stock Commercial Bank
98 YoY Year over year
99 YTD Year To Date

What’s new in this Report
Growth rates of credit outstanding, money supply
and customer deposits
Customer YTD depositgrowth
2021
2020
2019
Jan Feb Mar Apr May Jun Jul Aug Sep
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21
Credit YTD growth
Money supply (M2) YTD Growth
Customer deposit YTD growth
On-balance sheet NPL ratio
Gross NPL ratio (on-balance sheet NPLs, VAMC &
potential bad debts)
Adjusted NPL ratio (gross NPLs & potential NPLs from
COVID-restructured loans)
NPL ratios of credit institutions
Jan Feb Mar Apr May Jun Jul Aug Sep 7-Oct
YTD creditgrowth
2021
2020
2019
6

NIM ratio of the bankingsector
What’s new in this Report
2015 2016 2017 2018 2019 1H2020 2020 1H2021
2018 2019 2020 1Q2021 1H2021
YoY growth of banks’ profits and loan loss provision expense
YoY growth of profits after
tax
YoY growth of loan loss
provision expense
7

Section 1: Review of banking sector
Contents
1.1 Credit growth 9
1.2 Deposit growth & funding structure 16
1.3 Liquidity 22
1.4 Asset quality 25
1.5 Capital adequacy 35
1.6 Earnings quality 37
1.7 Operation efficiency and profitability 43
1.8 Outlook 47
8

Credit outstanding & growth
Credit growth recovered strongly in the first 6 months of 2021 but lost its pace since
quarter 3, following the deep influence of 4th wave COVID-19 resurgence
1.1 Credit growth
Figure 1: Credit outstanding (VNDtrn) & YoY growth Figure 2: YTD credit growth
Jan Feb Mar Apr May Jun Jul Aug Sep 7-Oct
2021
2020
2019
2016 2017 2018 2019
VNDtrn
Credit Outstanding (VNDtrn)
2020 Jun-21 Sep-21 7-Oct 2021e
Total credit YoY growth
9

CTG VCB TCB STB SCB MBB ACB VPB SHB HDB LPB VIB TPB SSB EIB NAB OCB MSB BAB ABB VAB VBB BVB NVB KLB PGB SGB
Credit YTD growth (%)
BID AGRB - - - - - -
Many banks managed to achieve above-average credit growth in 1H2021 thanks to focus
on high-growth sectors and leveraging a strong capital base
Figure 3: Credit outstanding (VNDbn) and YTD growth by selected banks, 1H2021
1.1 Credit growth
Credit growth by banks
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Credit outstanding(VNDbn) Average credit YTD Growth
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
10

Retail and large corporate loans have proven to be the key drivers for credit growth,
while credit to SMEs showed a sluggish expansion in 1H2021
Figure 4: Credit breakdown by segment (VNDtrn)
Credit growth by segment
1.1 Credit growth
1H2020
Retailloan
1H2021
Investment in corporate bonds
Loan to large corporates
2020
Loan to SMEs
YoY YTD
11

Although retail loan experienced a slump in 2020 due to the COVID-19, it remained the key
growth driver in many commercial banks
1.1 Credit growth
Figure 6: Contribution of retail to total customers loans in 25
commercial banks grew steadily over the past years
2016 2017 2018 2019 2020 1H2021
Figure 5: YoY growth of retail, corporate and total customer loans of
25 commercial banks
Banks' total loans Banks' corporate loans Banks' retail loans
2016 2017 2018
Corporate loans
2020 1H2021
2019
Retail loans
VIB KLB AGRB ACB STB VPB ABB TPB EIB HDB VCB LPB MBB TCB PGB OCB BID CTG MSB SCB NAB SHB SSB
Figure 7: Retail loans made up large proportions in many banks’ loan books and served as their main credit growth driver in 1H2021
%retail/customer loans
Contribution of retail loan to credit growth
- - - - - -
- - - - - - - - -
- - -
- - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - -
- - - - - - - - -
12

2019 1H2020
Banks focused on traditional lending while credit growth via C-bond investments cooled
off in 1H2021
1.1 Credit growth
2Q2020 3Q2020 4Q2020 1Q2021 2Q2021
Figure 9: Average lending interest rate vs average C-bond coupon rate
Average lending interest rate Average C-bond interest rate
Figure 10: Growth in customer loans, corporate bonds and credit
outstanding in selected banks
SCB VIB VCB ABB TCB MBB VBB TPB
- - - - - -
2020 1H2021
Figure 8: Breakdown of 29 banks’ credit outstanding by customer loans
and corporate bonds`
Customer loan (VNDtrn) Invesment in corporate bonds (VNDtrn)
- - - - - - - - - - - -
Corporate bond growth
Customer loan growth
Credit growth
Contribution of corporate bond to credit growth
13

Credit growth by sector
Despite modest growth of credit to real estate and securities sectors, lending to these
sectors still need to be closely watched due to their risky nature
1.1 Credit growth
Figure 11: Credit to real estate sector by types of borrowers
2018 2019 2020 1H2021
Total real estate loans
Developers YoY growth (%)
Home buyers (VNDtrn)
Home buyers YoY growth (%)
Developer
Homebuyer
Total
% of total credit
outstanding
% of total
credit
outstanding
2018 2019 2020 7M2021
Figure 12: Credit to securities sector
Credit to securities (VNDtrn) YoY growth
14

TPB VIB MSB TCB MBB VPB ACB STB EIB VCB BID AGRB CTG
JSCBs SOCBs
2020 Credit growth Initital credit limit Extended credit limit
Figure 14: Credit growth limits granted by SBV to commercial banks
Credit growth target
1.1 Credit growth
Jan-21 Mar-21 Jun-21 Sep-21 2021e
SBV granted extended credit quotas for many banks to align with the overall target of 12%
for 2021
Figure 13: Credit growth target for 2021
SBV target CIs' expectation YTD credit growth
- - -
- - - - - - - - - - - -
- - - - - - - - - - - -
- - - - - -
15

Contents
1.1 Credit growth 9
1.3 Liquidity 22
1.8 Outlook 47
16

Figure 15: Customer deposits (VNDtrn) and YoY growth
1.2 Deposit growth & funding structure
In 2021 deposit growth slowed down compared to previous years along with lowering
saving interest rates
Source: FiinResearch from SBV
Figure 17: Average deposit interest rates in VND
Figure 16: YTD deposit growth
YTD
Aug-21
2019 2020
Retail deposits
2016 2017 2018
Total deposit outstanding (VNDtrn)
Total customer deposit YoY growth
Jan Feb Mar Apr May Jun Jul Aug Sep
2021
2020
2019
2019 8M2020 2020 8M2021
1 to 6 months 6 to 12 months Over 12 months
17

Q1 Q2 Q3 Q4 Q1 Q3
2020
Q2
2021
Domestic individual investors
Domestic institutional investors
Foreign individual investors
Foreign institutional investors
Figure 18: YoY growth and contribution of retail and wholesale
deposits to total customer deposits
The slowdown in deposits was attributed to slump in retail deposits, as individuals
withdrew savings to invest in other channels, especially stock
Figure 19: Trading value by type of investors on HoSE (VNDtrn)
Retail deposit vs wholesales deposit
1Q2020 2Q2020 3Q2020
Contribution of retail deposits
YoY growth of retail deposits
4Q2020 1Q2021 8M2021
Contribution of wholesale deposits
YoY growth of wholesale deposits
18

KLB VBB SCB NVB STB NAB ACB AGRB VIB TCB PGB SG
B
SHB EI
B
SSB LPB OCB VPB BID MSB CTG ABB HDB VCB TPB MBB Sector
average
Retail
The proportions of retail and wholesale deposits varied among banks, depending on their
strategy and competitive advantage in retail and wholesale segments
Figure 20: Customer deposit structure of banks, 2020
Retail deposit vs wholesales deposit
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Wholesale
- - - - - - - - - - - - - - - - - - - - - - - - - - -
19

TCB MBB VCB MSB ACB STB ABB CTG BID VPB TPB EIB VIB PGB SGB OCB LPB HDB AGRB SHB NAB SSB NVB KLB SCB VBB BAB
With digital transformation, banks are able to increase their CASA portion, which helps to
optimize their funding costs and maximize NIM ratio
Figure 21: Banks’ current account saving account (CASA) ratio
2019 2020 1H2021
CASA deposits
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
20

AGRB SGB EIB STB VCB BAB NVB PGB ACB VAB KLB BID LPB NAB MBB VBB CTG SCB SHB TCB HDB VIB OCB ABB BVB SSB VPB TPB MSB Sector
average
Customer deposits Valuable papers Deposit and borowing from other credit institutions Due to Gov and SBV Entrusted investment capital
Besides customer deposits, many banks mobilized funds through other channels, especially
valuable papers, to meet SBV’s prudential ratios and ensure long-term stable funding
Figure 22: Funding structure of banks
Funding structure
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
21

Contents
1.1 Credit growth 9
1.3 Liquidity 22
1.8 Outlook 47
22

Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21
Credit YTD growth Money supply (M2) YTD Growth Customer deposit YTD growth
1.3 Liquidity
Although credit growth has exceeded deposit growth, liquidity of the banking system still
remained abundant
Figure 23: Money supply growth, customer deposit growth and credit
growth
Figure 24: Short-term (ST) deposits to medium- and long term (MLT)
loans of credit institutions
2017 2018 2019 2020
ST deposit to MLT loan
Jan-21 Feb-21 Mar-21 Apr-21
Ceiling ratio set by the SBV
23

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21
1.3 Liquidity
The abundance of liquidity is also reflected in the subdued levels of interbank rates and
government bond yields
Figure 25: Interbank rates
Figure 26: Government bond yield fixing
24

Contents
1.1 Credit growth 9
1.3 Liquidity 22
1.8 Outlook 47
25

NPL ratios
The banking system is exposed to high risk of NPL escalation stemmed from hidden
restructured loans
1.4 Asset quality
31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 30-Jun-21 31-Dec-2021e
Figure 27: Non-performing loan (NPL) ratios of credit institutions Figure 28: Total restructured loans of all credit institutions
On-balance sheet NPL ratio
Gross NPL ratio (on-balance sheet NPLs, VAMC & potential bad debts)
30-Jun-20 30-Sep-20 31-Dec-20 30-Jun-21 30-Sep-21
Outstanding restructured loans
% of restructured loans out of total credit outstanding
26

NAB CTG VCB ACB SHB MSB ABB AGRB VBB PGB BVB VPB TPB LPB
V
I
B BAB
N
VB BID HDB SGB OCB SSB STB TCB EIB MBB SCB KLB
Loan group 2 growth NPL growth
Although NPL ratio fell across most banks, overdue debts increased in absolute numbers,
indicating that they have started to encroach on banks’ loan book
Figure 29: On-balance sheet NPL reported by banks
1.4 Asset quality
Figure 30: Change in absolute amount of Loan Group 2 and NPLs
NPL ratios
BVB EIB PGB SCB ABB MSB SSB SHB AGRB BID VBB VIB STB OCB NVB SGB LPB HDB TPB MBB CTG NAB BAB VCB ACB TCB
2020 1H2021
KLB VPB - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - -
27

VCB TCB MBB ACB TPB BAB BID CTG SCB AGRB STB LPB HDB NVB SSB NAB OCB KLB VIB MSB SHB ABB VBB SGB EIB VPB PGB BVB
Figure 32: Loan Loss Reserve (LLR)/NPL of commercial banks
2019 2020 1H2021
Bad debt coverage
Banks step up provisioning in the wake of NPLs potentially incurring from restructured loans
1.4 Asset quality
1Q2020 1H2020 9M2020 2020 1Q2021 1H2021
Figure 31: Bad debt coverage ratios of listed banks
Loan Loss Reserve/On-balance sheet NPLs
Loan Loss Reserve/Overdue debts
Loan Loss Reserve/Total outstanding loans
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sector
28

ACB LPB SHB AGRB VIB BID VCB VPB TPB HDB MBB CTG TCB STB SCB
2020 1H2021
Loan loss provision
1.4 Asset quality
Loan Loss Provision has soared, eroding banks’ profitability
BID AGRB VPB CTG SHB STB MBB VCB TPB ACB LPB HDB VIB TCB SCB
- - -
- - - - - - - - -
Figure 34: Loan Loss Provision (LLP) expense as % of Net earning before tax and provision
2019 2020 1H2021
Figure 33: YoY growth of Loan Loss Provision (LLP) expense
- - -
- - - - - - - - -
- - - - - - - - -
- - - - - - - - -
- - - - - - - - -
- - -
- - - - - - - - - - - -
- - - - - - - - -
29

AGRB BID VPB CTG VCB TCB MBB VIB TPB HDB BVB ACB MSB
COVID-Restructured loans Specific LLR Specific LLR/(NPLs+COVID-Restructured loans)
Figure 36: Current level of Specific Loan Loss Reserve in some banks remained low considering credit risk from restructured loans, meaning they
will have to increase provisioning in the next 3 years as required
Bad debt coverage
Allowing for COVID - restructured loans, the level of provisions in many commercial banks
remained modest, urging for additional current buffer to cope with potential credit risk
Figure 35: Provisioning roadmap under Circular 03
1.4 Asset quality
- - -
- - - - - - - - - - - -
- - - - - - - - - - - - - - - - - -
30

AGRB BID VPB CTG VCB TCB MBB VIB TPB HDB BVB ACB MSB
Figure 38: Current level of Total Loan Loss Reserve (general and specific provisioning) in some banks remained low considering credit risk from
restructured loans
COVID-Restructured loans Total LLR (general and specific) Total LLR/(NPLs+COVID restructured loans)
HDB BVB TCB AGRB BID VIB MSB MBB CTG VCB ACB
31-Dec-20 30-Jun-21
TPB VPB - - - - - - - - -
Bad debt coverage
Current level of total provisions among banks also stay humble, urging for additional
provisions to be made to cope with potential credit risks when the policy evolves
Figure 37: Banks with large proportion of rescheduled loans
1.4 Asset quality
- - - - - - - - - - - - - - - - - - - - - - - -
- - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
31

METHODOLOGY FOR PROJECTION OF ADDITIONAL PROVISION REQUIRED
1.4 Asset quality
Projection of LLR
See next page for detailed projection of additional provisionsrequired
32

Bad debt coverage
33
Many banks would be required to set aside additional provisions to absorb potential credit
risk from restructured loans
Figure 39: Estimated specific LLR required and specific provision gaps (assumed that restructured loans are now in Group 1 and will be
categorized into overdue loan groups (2-5)
VNDbn [D] Specific LLR required for restructured loans[C] Total specific LLR required[B=(D+C)] [A]
LLR needed to be set aside by the end of 2021
[30% of (A-B)]
AGRB
BID
----
----
----
----
----
----
----
----
----
----
----
1.4 Asset quality

Gross NPL ratio incl bad debts recognized at VAMC On-balance sheet NPL ratio
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
2012 2013 2014 2015 2016 2017 2018
Figure 41: % NPL reported vs. %NPL including bad debts recognized at VAMC of selected banks, 1H2021
2019 2020 1H2021
Net NPL resolved in the year Accumulated NPL resolved
Bad debt resolutions
Credit risk scaled up rapidly, which might dissipate 5-year effort of bad debt resolution
1.4 Asset quality
Figure 40: Bad debt resolution progress
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
34

Contents
1.1 Credit growth 9
1.3 Liquidity 22
1.8 Outlook 47
35

PGB KLB NVB AGRB
2016 2017 2018 2019 2020 4M2021
Figure 43: CAR of banks applying Circular 41/2016/TT-NHNN, 1H2021 Figure 44: CAR of banks applying Circular
22/2019/TT-NHNN, 2020
1.5 Capital adequacy
As the COVID-19 pandemic deteriorates asset quality, banks, especially undercapitalized
ones, are forced to accelerate their capitalization progress to build up buffer
Figure 42: Capital adequacy ratio (CAR) of credit institutions
SOCBs JSCBs Foreign banks
HDB T PB O PB ABB* EIB SB S SB L CB V IB MB CB ST VBB NAB B AB*VAB* B TG*
- CB V
SGB* TCB - - - - - - - - - * M - PB A - B SH
- B* V - B* - VB B - ID C
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - -
36

Contents
1.1 Credit growth 9
1.3 Liquidity 22
1.8 Outlook 47
37

1.6 Earnings quality
Banks’ earning quality slowed down in 2020 but recovered strongly in 1H2021 across all
income segments despite the complicated development of COVID-19 pandemic
Figure 45: Income structure of listed banks, VNDtrn
2018 2019 2020 1H2021
Net Interest Income
Other Operating Income
Net Fee & Commission Income
YoY growth of total operating income
Figure 46: Income YoY growth by segment of listed banks
2018 2019 2020 1H2021
38

Figure 47: Average NIM of Vietnamese banks
Net interest income margin improved in 2021 thanks to higher credit growth and widening
interest rate spread
Net Interest Income
Q1 Q2
2019
Q3 Q4 Q1 Q2
2020
Q3 Q4 Q1
2021
Q2
Yield on average loan Costs of fund Spread
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
Figure 48: YoY and QoQ growth of net interest income of listed banks
Net Interest Income (QoQ) Net Interest Income (YoY)
2015
39
2016 2017 2018 2019 1H2020 2020 1H2021
Figure 49: Interest rate spread of the banking system

Change in NIM, 1H2021 vs 2020
% retail loan/total
customer loan, 1H2021
Net interest income margin (NIM) was highest in those banks with large retail portfolios and,
especially, developed consumer finance segment
Net Interest Income
Figure 50: NIM of selected banks
MBB
VIB
TPB
HDB
KLB
ACB
OCB
MSB
AGRB
LPB
SHB
VCB
NAB
CTG
BID
SSB
SGB
STB
ABB
BVB
EIB
BAB
NVB
PGB
VAB
VBB
SCB
NIM 1H2021
VPB
TCB
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
40

BID CTG MBB AGRB VPB TCB STB SCB VIB TPB
Figure 52: Structure of selected banks’ gross fee income, 2020
Settlement services Bancassurance Treasury services Agency services Others
Net fee & commission income
Average
Q1 Q2 Q3
2018
Q4 Q1 Q2 Q3
2019
Q4 Q1 Q2 Q3
2020
Q4 Q1 Q2
2021
Net income from service activities remained a healthy source of income for banks, to which
bancassurance and settlement services made the largest contribution
Figure 51: YoY and QoQ growth of net fee & commission income of listed
banks
Net Fee & Commission Income (QoQ) Net Fee & Commission Income (YoY)
- - -
- - - - - -
- - - - - -
- - - - - -
- - -
41

Other operating income
Other operating income, especially investment securities, lost its growth pace in 1H2021
after the last year’s surge
Figure 53: YoY growth of selected segments of other operating income Figure 54: Structure of other operating income
Figure 55: Securities portfolio of listed banks, VND trn
Securities portfolio 1-year government bond yield
Q1 Q2 Q3 Q4 Q1 Q2
2020 2021
Income from investment in other entities
Net gain from forex and gold
Net gain from other activities
Net gain from trading securities
Net gain from investment securities
2018 2019 2020 1H2021
42

Contents
1.1 Credit growth 9
1.3 Liquidity 22
1.8 Outlook 47
43

2016 2017 2018 2019 2020 1H2021
Operation efficiency
1.7 Operational efficiency & profitability
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
For profit maximization, banks continuously enhance operational efficiency through
optimization of personnel costs and implementation of technology in operation
Figure 56: Cost-to-income ratio of the banking system Figure 57: Operating income vs operating expenses of listed banks
YoY growth of total operating income YoY growth of operating expense
B
V
SGB
B
V
N
B
EI TB
S
B
BA
B
BV
B
G
P
B
A
N
G
A
…
B
LP
LB
K
B
A
V SS
B
B
I
V
T
BB
A
B
S
M
BB
M
CB
A T
CB
H
B
S
B
O
C
D
BI VP
B
Figure 58: Cost-to-income ratio of 29 banks
2020 1H2021
SCB
B
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- HDB
-
-
-
-
-
-
-
-
B
-
- P
-
-
-
-
-
-
-
CB
- V
-
-
-
-
-
-
-
-
- CTG
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44

Some commercial banks recorded excessive profit growth thanks to modest level of
provision in first half of 2021
Figure 59: YoY growth of provision for credit losses and profits after tax of
listed banks
1.7 Operational efficiency & profitability Profitability
Figure 60: YoY growth of profits after tax by bank, 1H2021
2018 2019 2020 1Q2021 1H2021
YoY growth of profits after tax
YoY growth of loan loss
provision expense
- - - - - - - - - - - - - - - - - - - - - - - -
-
- - - - -
-
- -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - -
45

VIB
CB
B
K
A
B
S
M
B
TP VP
B
H
D
B
B A
N B T
CB
B
O
C
CB
V
B
LP G
RB
A
BB
A
H
B
S
C
T
G
SS
B
D
BI
B
BV
B
A
V
BB
V
B
BA
B
G
P SG
B
B
EI
B
V
N
CB
S
Figure 62: ROE of 29 selected banks, 1H2021
2020 1H2021
1.7 Operational efficiency & profitability Profitability indicators
2016 2017 2018 2019 2020 1H2021
Thanks to higher income and profits, profitability indicators improved in commercial banks,
while, looking more closely into specific banks, some JSCBs outperformed SOCBs
Figure 61: Average ROE and ROA of Vietnamese banks
ROE ROA
TCB
VPB
B
S
M
B
B
M
B
I
V CB
A
T
LB
K H
D
B
BB A
C
B
V SSB
L
B
P C
T
G
B A
N HB
S
R
B
G
A S
B
V B
D
I T
B
S
B
G
P
B B
A
V
B
A B
CB
S
- OCB
-
-
Figure 63: ROA of 29 selected banks, 1H2021
2020 1H2021
L
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- B
- M
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TB
- S
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
B
-
-
- P
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-GB
-
B
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- B
-V
- E
B
-
-I
-
B
- V
- N
-
-
-
-
-
-
-
46

Contents
1.1 Credit growth 9
1.3 Liquidity 22
1.8 Outlook 47
47

FUNDING
ASSET QUALITY
1.8 Outlook for banking sector
The resilience of Vietnamese banking sector to COVID-19 pandemic would persist for the
rest of the year, supported by structural changes to adapt to the new normal
CREDIT GROWTH EARNINGS QUALITY
PROFITABILITY
CAPITAL ADEQUACY
48

Section 2: In-depth analysis on selected banks
49
Contents

Key financial figures of selected banks
Section 2: In-depth analysis on selectedbanks Key financial figures
50
Indicator Unit CTG VCB MBB TCB VPB
Asset 2020 1H202
1
2020 1H202
1
2020 1H202
1
2020 1H202
1
2020 1H202
1
Total assets VNDtrn
Market share by Total assets %
Credit outstanding
(Customer loans + C-bond investment)
VNDtrn
Credit growth (YoY) %
Credit growth (YTD) %
In which Customer loans VNDtrn
Customer loan growth (YoY) %
Customer loan growth (YTD) %
Asset quality
NPL %
Loan Loss Reserve/NPL %
Credit cost %
Liquidity & Capital
LDR %
CASA RATIO %
CAR %
Earnings quality & Profitability
NIM %
ROA %
ROE %

2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021
CTG VCB TCB MBB VPB
Loan to large corporates Retail loan Loan to SMEs Investment in corporate bonds
Apart from the mutual focus on retail loan to mitigate concentration risk, SOCBs directed their
focus on large corporates while JSCBs overhaul their approaches towards other segments
Figure 64: Credit outstanding (Customer loans & Corporate bonds) by segment of selected banks, 2020 vs. 1H2021
Credit growth and structure
Section 2: In-depth analysis on selectedbanks
1H2021 YTD
credit growth&
quota for 2021
Contribution of subsidiary FinCos to parent banks’ outstanding credit
- - -
- - -
- - - - - -
51

Section 2: In-depth analysis on selectedbanks Credit growth & structure
2019 1H2021 2019 2020 1H2021 2019 2020 1H2021 2019 2020 1H2021 2019 2020 1H2021
2020
CTG VCB TCB MBB VPB
While short-term loans took over SOCB’s loan books, their portions in JSCBs were
significantly lower
Figure 65: Customer loan by maturity by selected banks
Short-term loan Medium-term loan Long-term loan
- - -
- - -
- - - - - -
52

Banks’ reduction in interest rates (up to 1%) to support affected individuals and
businesses have resulted in a lower base of lending rates compared to previous periods
Figure 66: Lending interest rates at selected banks amid complicated developments of COVID-19
CTG VCB TCB MBB VPB
Corporate loan
Working capital loan
Medium- to long-Term loan
SME lending
Working capital loan
Medium- to long-Term loan
Retail and household loan
Unsecured cash loan
Secured cash loan
Auto loan
Home loan
Household business loan
Credit card
Lending interest rates
53

Section 2: In-depth analysis on selectedbanks Customer loans by sectors
2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021
CTG VCB TCB MBB VPB
While SOCBs sustain their emphasis on traditional sectors which drive the economy, JSCBs
focus on more profitable sectors which align with their risk appetite
Figure 67: Customer loans by industry of selected banks
Wholesale and retail trade; repair of motor vehicles, motorcycles
Manufacturing and processing
Trading and services
Construction
Households services
Mortgage loans to individuals
Real estates
Other sectors
- - -
- - -
- - - - - -
54

2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021
CTG VCB TCB MBB VPB
While SOCBs are more reliant on customer deposits as a source of funding, JSCBs actively
diversify to other sources to minimize the funding costs
Figure 68: Funding structure
Deposits from customers Deposits and borrowings from other CIs Valuable papers issued Due to Gov and SBV Entrusted investment capital
Funding structure
- - -
- - -
- - - - - -
55

2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021
CTG VCB TCB MBB VPB
Customer deposits
A larger proportion of CASA could be seen at banks that are heavily invested in technology
to ensure seamless customer experience through their easy-to-use applications
Figure 69: Structure of customer deposits at selected banks
CASA Under-1-year term deposits 1-5 year term-deposits Over-5-year term deposits
Parent bank's CASA
- - -
- - -
- - - - - -
56

Section 2: In-depth analysis on selectedbanks Customer deposits
57
This year JSCBs cut deposit rates more intensively than SOCBs did, as they could manage
liquidity with reduced reliance on customer deposits thanks to diversification of funding
Figure 70: Term deposit rates (per annum) of selected banks
Bank Limits Terms
1M 6M 12M 24M
Sep-20 Sep-21 Sep-20 Sep-21 Sep-20 Sep-21 Sep-20 Sep-21
VCB
---
---
---
---

2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021
CTG VCB TCB MBB VPB
Loan loss reserve/Total outstanding loans Loan loss reserve/NPLs Loan loss reserve/Overdue loans
2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021 2020 1H2021
CTG VCB TCB MBB VPB
Even though reported NPL ratios varied among banks, most banks accelerated their
provision for loan loss following the unfolding effects of COVID-19
Figure 71: NPL and proportions of overdue loans (group 2-5) and restructured loans out of total outstanding loans at selected banks
NPL Overdue loans/Total outstanding loans Restructured loans/Total outstanding loans
Asset quality
Figure 72: Bad debts coverage ratios at selected banks
- - -
- - -
- - - - - -
- - -
- - -
- - - - - -
58

CTG VCB TCB MBB VPB
Net interest income Net Fee and Commission Income
2020
Other operating income
1H2021
CTG VCB TCB MBB VPB
Section 2: In-depth analysis on selectedbanks TOI structure
Banks’ earning quality recovered strongly in 1H2021 after a period of sluggish growth in
2020 under the pervasive impact of the pandemic
Figure 73: TOI structure at selected banks
- - -
- - -
- - - - - - - - -
- - -
- - - - - -
59

CTG VCB TCB MBB VPB
Personnel expenses SG&A Establishment expenses
2020
Other expenses CIR
1H2021
CTG VCB TCB MBB VPB
Section 2: In-depth analysis on selectedbanks OPEX structure
Given the potential decline in NIM following lower lending rates upon banks agreement,
minimization of operational expenses became a key to safeguard their profitability
Figure 74: OPEX structure and CIR at selected banks
- - -
- - -
- - - - - - - - -
- - -
- - - - - -
60

Section 3: Key development trends in financial sectors
Contents
3.1 Digital transformation in banking sector 62
3.2. Recent development in non-bank financial sectors 65
3.2.1 Consumer finance 66
3.2.2 Product trend: Buy now pay later 67
3.2.3 Corporate bond market 70
3.3 M&A and sector consolidation 73
61

Section 3: Key development trends in financialsectors
3.1 Digital transformation in the banking sector
Vietnamese banks have rushed towards complete digital transformation of their processes,
both front- and back-end, to increase efficiency and service quality for customers
Figure 75: Phases in the digital journey of banking
Figure 76: Notable initiatives of Vietnam digital transformation in banking
62

Digital banking has become a cornerstone of banks when consumer preference has shifted
to contactless payments and other banking transactions amidst the prevalence of COVID-19
Figure 77: Three forms of a bank’s digital banking divisions
01
02
03
Figure 78: Notable technologies in digital banking
63

Banks have been increasingly executing fintech partnerships to accelerate innovation and
establish stronger presence by enlarging their ecosystems
Figure 79: Areas of cooperation between credit institutions and Fintech companies
Cooperation
between CIs
and Fintech
companies
64

Contents
65

2016 2017 2018 2019 2020 1H2020 1H2021
Figure 80: Total outstanding loans of consumer finance (CF) players
Total Outstanding CF Loans (Excluding Inactive FinCos) YoY Growth
3.2.1 Consumer finance
Consumer finance market, especially by FinCos, remained under shadow of COVID-19
YTD growth
1H2021
YoY growth
1H2021
CAG
R
2016 – 1H2021
CF
Banks’ CF
FinCos’ CF
Figure 82: Growth rate of CF market
Figure 81: Proportion of Banks’ CF and active FinCos
2016 2017 2018 2019 2020 1H2020 1H2021
Banks' CF Active FinCos' CF
66

3.2.2 Product trend: Buy now pay later
Buy Now Pay Later (BNPL) has emerged since the onset of COVID-19 along with the
proliferation of e-commerce and expansion of digital payment systems
Figure 83: BNPL business models
01
67
02

3.2.2 Product trend: Buy now pay later
Fintech is growing fast in establishing BNPL platforms to provide young consumers instant
and convenient checkout finance options
Figure 84: Shopping and payment procedures with BNPL platforms
01 02 03 04 05 06 07
Service offering
Initiatives
BNPL Platforms
68
Figure 85: Key BNPL platforms, their service offering and initiatives

3.2.2 Product trend: Buy now pay later Provision of credit line
Traditional lenders have been quick to react to this new product trend, reflected by their
strategic partnerships with e-wallets and e-commerce platforms
Figure 86: Customer journey for credit line product
69

3.2.3 Corporate bond market
Corporate bonds market sustained its importance as a funding source
2015 2016 2017 2018 2019 2020 1H2021
Figure 87: C-bond outstanding and market size, 2015 – 1H2021
Outstanding C-bonds (VND trn) % of GDP
2015 2016 2017 2018 2019 2020 1H2020 1H2021
Private placement Public offering
Figure 88: New issuances of C-bonds (VND trn), 2015 – 1H2021
2015 2016 2017 2018 2019 2020 1H2021*
Figure 89: C-bond market size (outstanding value) as % of GDP, 2015 –
1H2021
Indonesia Phillipines Vietnam Thailand Singapore Malaysia
70

Banks and real estate developers continued to be the key issuers of corporate bonds
Figure 92: Volume of C-bonds (VNDbn) issued by banks by tenure, 1H2021
Figure 90: Structure of C-bond issuers, 1H2021 Figure 91: Volume of C-bonds (VNDbn) issued and redeemed by banks,
1H2021
Bonds issued Bonds redeemed
71

Securities companies and credit institutions are major investors of bonds
Breakdown of institutional investors of corporate bonds
Figure 93: C-bond investor structure, 2021
Figure 94: Average tenure and interest rate of key issuers
Tenure Interest rate Average 12-month deposit rate
72

Contents
73

3.3 M&A and sector consolidation
While active commercial banks are aggressively in search for long-term funding through M&A,
SBV is also seeking suitable banks to merge with or acquire the specially controlled ones
Figure 95: Financial results of specially controlled banks, VNDbn, 2020
Dong A Bank
OceanBank
CBBank
GPBank
Total customer loans Customer loan growth Net interest income Total operating income Shareholder’s equity
- - -
- - -
- - -
74

3.3 M&A and sector consolidation
1H2021 witnessed a wave of foreign investors entering Vietnam CF market through high-
value M&A deals with parent banks, from which the Fincos enjoyed substantial benefits
Figure 96: FE Credit & SHB Finance’s transaction and comparable transactions
No
Date of
Announcement
Target
Companies
Buyer Seller
%
Transfer
Deal
Value
Deal
Value
P/B P/E
Price/
Loan
book
US$mn VNDbn
No
Date of
Announcement
Target
Companies
Buyer Seller
%
Transfer
Deal
Value
Deal
Value
P/B P/E
Price/
Loan
book
US$m VNDbn
01.
02.
03.
75

Section 4: Major Policy and Regulatory Framework Updates
Contents
4.1 Policy responses to the COVID-19 pandemic 7
7
4.2 Updated regulations on banking sector 7
8
76

4.1 Policy responses to the COVID-19 pandemic
SBV has officially issued a new Circular to replace Circular 03/2021 TT-NHNN to expand
the scope of loans eligible for credit support, better tackling the COVID-19 effects
Figure 97: Effective conditions for loans to be eligible for credit support under Circulars 01/2020, 03/2021 and 14/2021
77
Relief scheme Time of loans arising Overdue period Guideline

4.2 Updated regulations on banking sector
The SBV issued regulations promulgating debt collections and bad debt settlement of CIs
78
TITLE KEY ACTIONS RATIONAL FOR CHANGES IMPLICATIONS

4.2 Updated regulations on banking sector
The Draft Circular stipulates purchasing and selling corporate bonds of credit institutions
RATIONALE
IMPLICATIONS
79

Section 5: Macro-economic updates
80
Contents

Section 5: Macroeconomics updates
COVID-19 situation showed positive signs, as social distancing measures loosened thanks to
acceleration in vaccination
Figure 98: COVID-19 active cases and total recovered Figure 99: Vaccination rate (% of adult population aged above 18)
Active Recovered
Cumulative
Dead
Cumulative
Total
confirmed cases HCMC
LongAn
Binh Duong
Hanoi
Dong Nai
Fully vaccinated Have had at least one dose
- - -
- - -
- - -
- - -
81

Section 5: Macroeconomics updates
Vietnam’s economic growth was stunted by lockdowns but set to start rising in the final
quarter of the year should the restrictions be lifted
Figure 100: Key economics indicators, 2019 – 9M2021
2019 2020 9M2021
GDP growth (%)
Inflation (%)
Average PMI
Retail sales growth (%)
FDI disbursement (% of GDP)
Trade turnover (VNDtrn))
Budget surplus/deficit (VNDtrn)
82

Section 6:Appendices
83
Contents

Figure 101: Interest rate reduction and loan restructuring results by bank
Agribank
BIDV
-----
-----
-----
-----
-----
-----
-----
-----
-----
-----
-----
-----
-----
-----
84

85
Method Outstanding loans No of customers Support value
Policy
(VNDtrn) (thousand) (VNDtrn)
Figure 102: Credit support packages offered by Credit institutions at Circular 01/2020 and 03/2021
Publishing License No. 3126-2021/CXBIPH/23-73/HĐ dated on Sep 30th, 2021

8
6
HoChiMinh CityBranch
3rd Floor, Profomilk PlazaBuilding, 51-53 VoVanTanStreet,
Ward6, District 3, HoChiMinh City,Vietnam
Tel:+8428 3933 3586/ 85
HeadOffice
10th Floor, Peakview Tower, 36 Hoang Cau Street,
OCho DuaWard, Dong DaDistrict, Hanoi, Vietnam
Tel:+8424 3562 6962
DongLe,CFA
ManagingDirector, MarketResearchServices
T:+84(024) 3562 6962 (ext. 110)
E:dong.le@fiingroup.vn
YenNguyen
Client Advisor, MarketResearchServices
T:+84-24-3562 6962
E:yen.nguyen@fiingroup.vn
@2021 FiinGroup Corporation. All rightsreserved.
All information contained in this publication is copyrightedin the nameof FiinGroup, and assuch no part, of this publication may be
reproduced, repackaged,redistributed, resold in whole or in any part, or usedin any form or by any meansgraphic, electronic or
mechanical, including photocopying, recording, taping, or by information storageor retrieval, or by any other means,without the
expresswritten consent of thepublisher.
HongDucPublisher
FiinResearchis part of FiinGroup, aVietnam’s leading provider of financialdata, businessinformation, industry researchand other data-
driven analytics services.
Contactus

FiinResearch - Vietnam Banking Report 2021

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Ähnlich wie FiinResearch - Vietnam Banking Report 2021

Ähnlich wie FiinResearch - Vietnam Banking Report 2021 (20)

Mehr von FiinGroup JSC

Mehr von FiinGroup JSC (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

FiinResearch - Vietnam Banking Report 2021