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.– Photo enternews.vn

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, Viet Nam 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.

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 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 (US$44.05 million) in 2018, thanks to specific strategies in sales of financial products, especially in non-credit services.

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.

The move was decided after the retail banking segment contributed to a large amount of the total profits of many banks last year.

The Bank for Investment and Development of Vietnam, for example, gained a record high in profit last year, thanks to a focus on retail banking segment. Specifically, the bank’s segment last year grew by 33 per cent against the previous year, helping net income from the segment increase by 35 per cent from 2016.

Military Bank also saw a sharp increase of 34 per cent in net income from retail banking services last year.

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. – VNS