Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong has just approved 17 credit institutions and branches of foreign banks by 2021.

Vietcombank is the bank with the highest profit before tax. Photo: H. Dịu

Specifically, 17 banks in the group of credit of system importance in 2021 include Vietnam Bank for Agriculture and Rural Development (Agribank); Asia Commercial Bank (ACB); Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank); Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank); Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV); Southeast Asia Commercial Joint Stock Bank (SeaBank); Vietnam Maritime Commercial Joint Stock Bank (MSB); Vietnam Technological and Commercial Joint Stock Bank (Techcombank).

There are also the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank); Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank); Military Commercial Joint Stock Bank (MBBank); International Commercial Joint Stock Bank (VIB); Saigon Commercial Joint Stock Bank (SCB); Saigon - Hanoi Commercial Joint Stock Bank (SHB); Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank); TienPhong Commercial Joint Stock Bank (TPBank); Vietnam Prosperity Joint Stock Commercial Bank (VPBank).

The Governor of the State Bank of Vietnam requires the Banking Inspection and Supervision Agency, the State Bank of the province or centrally-affiliated cities to monitor, closely supervise, and promptly warn of risks in the operations of the 17 credit institutions mentioned above to prevent material and systemic risks.

According to Circular No. 08/2017/TT-NHNN regulating the order and procedures for the supervision of banks, credit institutions and foreign bank branches that have systemic importance are credit institutions and bank branches. Foreign goods are likely to cause a negative impact on the entire system of credit institutions, foreign bank branches and/or systematic risk to disrupt the operation of the system of credit institutions, foreign bank branches and the entire economy in case of insolvency.

Therefore, the group of banking supervision subjects is divided into two groups, including: the group of credit institutions, foreign bank branches that have systematic importance and the other group in the system.

The criteria for determining the importance of the system, the content of macro safety monitoring, the frequency of making macro safety monitoring reports for the group of credit institutions and foreign bank branches are of relative importance is guided in the Banking Supervision Handbook issued by the Governor of the State Bank.

Based on the criteria in the banking supervision handbook, the Chief Inspector and supervisor of banks shall submit to the Governor of the State Bank the list of credit institutions and foreign bank branches that have systemic importance in each period.

In terms of charter capital, these 17 banks all exceeded VND10,000 billion. In which, BIDV is the largest in terms of charter capital with over VND40,220 billion by the end of 2020.

The size of the charter capital of the 17 banks. Chart: H. Diu

However, the profit of these 17 banks was strongly differentiated when a bank with a profit of more than VND23 trillion, equivalent to about US$1 billion was Vietcombank, but also a bank with nearly VND700 billion profit was SCB.

The pre-tax profit for the year 2020 of the 17 banks. Chart: H. Diu

The bad debt ratio of the group of 17 important banks issued by the State Bank is mostly below 3% as regulated, except for VPBank. Most banks also tended to reduce the NPL ratio compared to 2019. Agribank alone did not give specific data on the bad debt ratio.

The bad debt ratios of 17 banks. Chart: H. Dịu