Revenue from insurance in the first quarter of many banks was only 50% of the same period in the same period, after many years of continuous high growth.
The financial picture of the banking group in the first quarter of this year, in addition to the slowing rate of profits and high bad debts, is also the decline of the insurance segment - the field that is considered the "golden egg" of the banking sector. recent years.
In terms of margin, International Bank (VIB) and Tien Phong Bank (TPB) saw the biggest declines. In the first quarter of this year, TPBank's business, insurance and consulting service fees were recorded at more than 116 billion dong, halving compared to the same period last year. Similarly, VIB's insurance commission revenue also decreased by nearly 50%, from 214 billion VND in the first quarter of 2022 to 118 billion VND.
MB – the leading bank in terms of insurance activities without an exclusivity agreement – also recorded a revenue drop of more than 10% in the first quarter of this year. This bank directly owns two insurance companies, MIC (MB owns 68,37%) and MB Ageas Life (61%), in both life and non-life segments.
With a smaller scale, but the decrease of SeaBank with this segment also recorded more than 50%. Revenue from insurance agency services of this bank was just over 22 billion dong in the first quarter of this year, compared to nearly 50 billion dong in the same period last year.
Some other banks have exclusive agreements on insurance distribution but did not disclose details of this segment's revenue in the first quarter.
The decline in the insurance segment is part of the reason why many banks' service revenue is lower than in the same period.
Among 27 banks listed and traded on the stock market, 11 banks recorded a decline in net profit from services in the first quarter of this year, including MBB, SeaBank or VIB - the banks that recorded revenue from banking services. Insurance revenue decreased.
MB's net profit from service activities was only nearly 700 billion dong in the first three months of this year, compared to 1.100 billion dong in the same period last year. Vietcombank, SeaBank, Sacombank ranked first with a decrease of 47-57%. NCB alone is the only bank with a net loss from service activities.
For TPBank, although the insurance segment dropped sharply, the bank still recorded a 36% increase in net profit from services over the same period thanks to revenue from payment services and other activities. Similarly, some other banks have increased service activities in the first quarter such as VPBank, VietinBank, SHB, BIDV or HDBank.
Bancassurance, a combination of the two terms banking and insurance, is considered a "gold mine" for banks in recent years. This type of cross-selling helps insurers exploit large customer files from banks, minimizing expansion costs; while banks increase revenue, take advantage of customers buying insurance to promote other services.
In the first half of 2022, insurance premium revenue alone through Bancassurance channel accounted for 41% of total new revenue of insurers. This ratio is forecasted to soon reach 50% of total new mining revenue, helping the bank surpass agents to become the main money-making channel for insurance companies.
However, the "golden egg" of banks is also revealing many problems.
Along with prepaid fees of trillions of dong, high commission rates are sales pressures (KPIs) that banks have to respond to insurance companies. This pressure, then, is transferred to the very people doing the insurance advice – the teller or the credit officer.
Last year, many people reflected that bank loans were required to be accompanied by insurance. Some customers also reported being improperly advised, leading to spending money to buy insurance disguised as "investment savings" products.
Earlier this year, in the context of insurance sales through banks exposed many problems, some banks removed the name of the insurance sales KPI, instead calling it a different or general calculation. into the fee KPI.
At one of the leading private banks in the market, the life insurance sales target was replaced by the "net fee revenue", which is calculated collectively from the fees for credit products, business loans, consumer products and services. use and sell insurance. At another private bank, the target of “collecting fees from insurance sales” was changed to “collecting fees for financial advice”.
Minh Son
