The "big players" are running out of steam.

According to statistics compiled by Nguoi Dua Tin based on the Q1/2023 financial reports of 28 banks, profits from service activities have begun to slow down, decreasing by 5.35% compared to the same period last year. Some banks even recorded no profit at all from this highly profitable segment.

Specifically, as of March 31, 2023, as many as 11 banks recorded a decrease in net profit from service activities compared to the first quarter of 2022.

Among them, SeABank recorded a sharp drop in service income, by nearly 57%, reaching 119 billion VND, mainly due to a decrease of 55% and 68% respectively in revenue from insurance agency services and other services.

Next is Sacombank, with a sharp decline of over 50% in this indicator, mainly due to a decrease in service income of over VND 581.2 billion compared to the same period last year, while expenses increased.

Having been the "champion" in net profit from service activities in the first quarter of 2022, Vietcombank , the banking giant, has now fallen to 5th place in the system, earning only 1,456 billion VND, a sharp decline of 46%. The main reason is a decrease in service income of nearly 830 billion VND, coupled with an increase in expenses of approximately 425 billion VND.

At MB, profit from service activities also decreased by 38%, recording 690 billion VND, due to revenue shortfalls from most services except for payment and treasury operations.

Accordingly, revenue from debt recovery, asset valuation, and exploitation activities decreased most sharply at 85%, followed by insurance business at second place with a decrease of 66%.

Revenue from securities brokerage services, advisory services, other services, and trustee agency services also decreased by 63%, 98%, 11%, and 66%, respectively.

Profits from service activities of other major private banks such as ACB and MSB also recorded sharp declines, down 15% and 20% respectively.

The opposite trend occurred at smaller banks. Accordingly, the bank with the strongest growth in the first quarter of 2023 was ABBank, with a 111% increase, reaching VND 134 billion. Following that was Nam A Bank, with net profit from service activities increasing sharply by 97% compared to the same period last year, reaching VND 130 billion.

In third place is Bac A Bank with an 85% increase, earning over 30.5 billion VND in profit. Most of the bank's service activities showed growth, with the strongest increase being in trust and agency services, which rose by 166%.

Following closely behind is KienLongBank, which recorded a 73% increase in this indicator, driven primarily by payment services that generated nearly 110 billion VND, almost 15 times more than the same period last year.

Following closely behind in terms of growth rate of interest income from service activities is the "giant" VietinBank with a 57% increase.

Other large-scale private banks such as Eximbank saw increases of 48%, SHB 41%, TPBank 36%, and VPBank 34%.

In terms of total net profit from service activities, VietinBank has overtaken Vietcombank from last year, bringing in over 2,000 billion VND in profit from this indicator.

Techcombank ranked second with net profit from service activities reaching VND 1,944 billion. Following closely behind was VPBank, bringing in VND 1,668 billion in net profit.

Two banks in the Big 4 group, BIDV and Vietcombank, followed closely behind, recording VND 1,517 billion and VND 1,456 billion respectively.

Next, banks that also recorded service operating profits exceeding 600 billion VND include TPBank, MB, HDBank, Sacombank, ACB, and VIB.

Within the system, NCB is the only bank to record a loss of 400 million VND in its service segment, compared to a profit of 85 billion VND in the same period last year. Specifically, the bank incurred a loss of 360 million VND from performing payment, treasury, and other operations. The main reason for this was that expenses (24.3 billion VND) exceeded income (23.9 billion VND) when exploiting these services.

Profits from service activities used to be the "golden goose" for many banks in previous periods. Most institutions chose to develop traditional services such as treasury payment operations.

However, the decline in income from cross-selling activities (such as insurance) and the increase in service operating costs are the main reasons for the narrowing growth in service-related profits for banks .

Source