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Average Equity Of 24 Banks From 2008-2017


2013

81,545,968

14.99%

384,889,836

BIDV

10,568,462

SGB

107,196,360

2014

96,069,548

17.81%

439,070,127

BIDV

11,139,340

SGB

124,400,565

2015

121,799,891

26.78%

590,917,428

BIDV

11,520,181

SGB

158,546,015

2016

149,327,829

22.60%

713,632,772

BIDV

12,430,861

SGB

191.375.840

2017

179,433,955

20.16%

855.535.525

BIDV

13,988,536

SGB

227,932,575

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Source: Author's statistics from financial statements of 24 Vietnamese commercial banks from 2008-2017


Chart 2.2: Outstanding loans of 24 Vietnamese commercial banks from 2008-2017



Source: Author's statistics from the financial statements of 24 Vietnamese commercial banks from 2008-2017. From the collected data, from 2008 - 2017, the outstanding loans of banks have grown significantly. By the end of 2017, the average outstanding loan balance of Vietnamese commercial banks was 179,433,955 million VND, 6.5 times higher than in 2008, which was 27,532,918 million VND. Similar to the total assets that the author analyzed above, over the years, outstanding loans have increased, but it is still a growth.

uneven over the years.


The expansion of the banking network has brought in a large amount of idle money from the mobilization of the people, combined with the support of interest rates and stimulus policies from the Government to prevent economic recession, leading to massive credit growth in 2009 - 2010. It is estimated that in 2009, the growth rate of outstanding loans was 40.2% compared to 2008 and in 2010, it increased by 35% compared to 2009. With the above favorable conditions, lending activities for real estate investment, stock investment, consumption, etc. exploded, leading to the consequences of bad debt later. In that situation, the Government implemented a tight monetary policy by


Directive No. 01/CT-NHNN issued on March 1, 2011 required commercial banks to develop a credit growth plan of less than 20% compared to the debt at the end of 2010 and must be approved by the State Bank. This caused outstanding loans to grow more slowly in the following years, peaking in 2012, down to 14.78%. From 2015 to 2016, the outstanding loan situation has stabilized again due to the regulations from Circular 36/2014 effective from January 2015, creating favorable conditions for the real estate market to recover, specifically the ratio of medium and long-term loans increased from 30% to 60%, reducing the risk coefficient of real estate loans from 250% to 150%, limiting credit flows into the stock market, in addition, with the appearance of two credit packages: a credit package worth 30,000 billion VND to solve housing difficulties and a credit package worth 50,000 billion VND in the form of a normal commercial credit package and as a result, the credit growth rate in 2015 was 22.78% compared to 2014 and in 2016 was 22.66% compared to 2015.

Next, the author would like to present the lending situation of Vietnamese commercial banks in 2017. The leading ones in terms of outstanding loans are BIDV (VND 855,535,525 million), CTG (VND 782,385,236 million), VCB (VND 535,321,404 million) and the lowest are SGB (VND 13,988,536 million and approximately 61.2 times less than BIDV), PGB (VND 21,192,835 million and approximately 40.4 times less than BIDV), KLB (VND 24,465,617 million and approximately 35 times less than BIDV). And finally, we can clearly see the strong dispersion or the large difference in outstanding loans between the group of large banks and the group of small banks and it is tending to increase steadily over the years.

2.1.2 About capital

Equity analysis

The equity of a commercial bank includes the capital provided by the bank, or contributed by the bank owners when it was first established, plus the amounts set aside and retained from operating profits. The equity of a commercial bank accounts for a small proportion of the items that make up the capital source (usually only


Capital (accounting for 5% of total capital) but plays an extremely important role for banks. Due to its regular and stable nature, banks can use it for various purposes such as equipping technical facilities, creating fixed assets to serve the bank itself, and can be used for lending, especially for joint venture investment. On the other hand, with its protective function, bank-owned capital is considered as a collateral to create trust with customers, maintain the ability to pay customers when the bank operates at a loss. Moreover, it is a decisive basis for the scale and volume of mobilized capital as well as the lending and guarantee activities of the bank. The scale and growth of bank-owned capital will determine the development capacity of commercial banks.

Similar to the development of total assets, the equity of Vietnamese commercial banks increased continuously in the period 2008-2017 but the growth rate was uneven, in other words, the bank had an unstable growth rate of equity. The data has been summarized in Table 1.7 and that trend is shown more specifically in Chart 1.4.

Table 2.3 Average equity of 24 commercial banks from 2008-2017


(Unit: Million VND)


Year

Average

% Change

Highest

Bank Name

Lowest

Bank Name

Standard deviation

2008

4,692,383


13,790,042

VCB

1,020,728

TPB

4,399,643

2009

5,568,186

18.66%

17,639,330

BIDV

1,093,485

PGB

5,150,713

2010

7,551,119

35.61%

24,219,730

BIDV

2,022,338

NCB

6,301,810

2011

9,384,230

24.28%

28,638,696

VCB

2,590,976

PGB

7,982,249

2012

10,830,254

15.41%

41,546,850

VCB

3,184,908

NCB

10,001,069

2013

12,496,852

15.39%

54,074,666

CTG

3,203,537

NCB

12,911,405

2014

12,870,819

2.99%

55,033,833

CTG

3,211,672

NCB

13.202.117

2015

14,410,347

11.96%

56,110,146

CTG

3,217,325

NCB

14,323,864

2016

15,473,750

7.38%

60,306,764

CTG

3,228,165

NCB

15,304,428

2017

17,586,790

13.66%

63,765,283

CTG

3,218,141

NCB

16,803,591

Source: Author's statistics from financial statements of 24 Vietnamese commercial banks from 2008-2017


Chart 2.3: Average equity of 24 commercial banks from 2008-2017



Source: Author's statistics from the financial statements of 24 Vietnamese commercial banks from 2008-2017. Evidence for this instability, the average equity from 2008 to 2010 grew steadily and stably, in the period from 2011 to 2014 witnessed a decline in the growth rate of equity, peaking in 2014 (growth of 2.99% compared to 2013), by 2015, equity grew rapidly again and then decreased again in 2016. The explanation for the sudden growth of equity from 2008 to 2010 is: first, due to the State's regulations on legal capital of banks according to Decree No. 141/2006/ND-CP dated November 22, 2006 and Decree No. 10/2011/ND-CP dated 26/01/2011 of the Government; second, banks want to expand their scale, increase their competitiveness with other banks; third, because retained earnings are included in equity. In addition, the average equity of Vietnamese commercial banks increased slightly and decreased sharply in the remaining years due to the restructuring process of the banking industry, specifically the provisioning

risk to handle bad debts before.


As of the end of 2017, the banks with the largest equity capital are still the group of State-owned commercial banks in descending order: CTG (VND 63,765,283 million), VCB (VND 52,557,959 million), BIDV (VND 48,834,010 million), VPB (VND 29,695,710 million). In addition, we can also mention banks such as NCB, SGB, KLB which currently have very little equity capital compared to State-owned commercial banks.

Analysis of the ratio of equity to total capital


Self-financing ratio (CAP) = owner's equity/total capital. This indicator reflects the financial self-sufficiency and financial independence of the enterprise. This indicator shows how much of the total capital to finance the enterprise's assets is owner's equity and how much is debt. The larger the value of this indicator, the higher the financial self-sufficiency, the higher the financial independence of the enterprise, and vice versa, the smaller the value of the indicator, the lower the financial self-sufficiency of the enterprise, the lower the financial independence of the enterprise.

Table 2.4 Equity/total capital of 24 commercial banks from 2008-2017


(Unit: %)


Year

Average

% Change

Highest

Bank Name

Lowest

Bank Name

Standard deviation

2008

14.92%


42.20%

TPB

5.46%

BIDV

9.78%

2009

10.93%

-26.74%

22.04%

LPB

5.16%

CTG

5.03%

2010

10.67%

-2.43%

25.54%

KLB

4.94%

CTG

5.15%

2011

10.23%

-4.08%

21.51%

SGB

4.26%

ACB

4.63%

2012

11.76%

14.91%

23.83%

SGB

5.47%

BIDV

5.25%

2013

10.39%

-11.59%

23.84%

SGB

5.84%

BIDV

3.72%

2014

9.18%

-11.71%

22.03%

SGB

5.12%

BIDV

3.49%

2015

8.93%

-2.69%

19.11%

SGB

4.89%

SCB

3.29%

2016

8.11%

-9.20%

18.45%

SGB

4.27%

SCB

3.52%

2017

7.64%

-5.82%

16.03%

SGB

3.46%

SCB

3.03%

Source: Author's statistics from financial statements of 24 Vietnamese commercial banks from 2008-2017


Chart 2.4: Average equity/total capital of 24 commercial banks from 2008-2017


Source: Author's statistics from financial statements of 24 Vietnamese commercial banks from 2008-2017


The average equity/total capital ratio has been decreasing continuously over the years and gradually approaching 7%, showing that most of the existing capital comes from mobilization from the population. However, during the decrease, there was also a slight increase in 2012. This ratio is quite low for large banks such as BIDV, CTG, VCB, ACB, TCB and remains in the range of 6% - 8%. Notably, in small banks such as KLB, NAB, OCB, PGB, SGB, VIB, this ratio is quite high and is in the range of over 10%, the reason is that according to the Government's capital increase roadmap, the business activities of these banks have not kept up with the growth rate of capital. By the end of 2017, the banks with the lowest ratio were SCB (3.46%), BIDV (4.06%), NCB (4.48%), and the highest were SGB (16.03%), MSB (12.23%), PGB

(12.51%).


2.1.3 About profit

Analysis of return on assets (ROA)


This ratio is calculated by dividing the profit after tax by the total assets, which means how much net profit is generated for every 100 dong of assets, or in other words, the company's efficiency in using assets to make profit. The average result of this ratio over the years from 2008 to 2016 and the fluctuation trend are shown in Table 1.6 and Chart 1.6.


Table 2.5 Average ROA of 24 Vietnamese commercial banks from 2008-2017


(Unit: %)


Year

Average

% Change

Highest

Bank Name

Lowest

Bank Name

Standard deviation

2008

1.08%


2.10%

ACB

0.165%

NAB

0.005

2009

1.31%

21.69%

3.11%

LPB

0.514%

NAB

0.006

2010

1.29%

-1.33%

4.73%

SGB

0.462%

SCB

0.008

2011

1.19%

-8.20%

2.54%

PGB

0.659%

VIB

0.004

2012

0.89%

-24.85%

2.00%

SGB

0.010%

NCB

0.005

2013

0.63%

-29.25%

1.47%

KLB

0.024%

SCB

0.004

2014

0.58%

-8.40%

1.25%

MBB

0.022%

NCB

0.004

2015

0.47%

-17.88%

1.24%

VPB

0.013%

NCB

0.003

2016

0.49%

3.04%

1.34%

TCB

0.016%

NCB

0.003

2017

0.71%

44.88%

2.39%

TCB

0.028%

SCB

0.006

Source: Author's statistics from financial statements of 24 Vietnamese commercial banks from 2008-2017

Chart 2.5: Average ROA of 24 Vietnamese commercial banks from 2008-2017



Source: Author's statistics from financial statements of 24 Vietnamese commercial banks from 2008-2017


From the financial statements of Vietnamese commercial banks, we can see that the average ROA of Vietnamese commercial banks in the period from 2008 to 2017 is not high and fluctuates around 1%, especially growing from 2009 - 2010 and showing signs of decline from 2011-2015, in general, ROA is on a downward trend, proving that the business performance of Vietnamese commercial banks is not good during this period. Thanks to the stimulus package launched by the Government in 2009, it contributed to increasing the profits of commercial banks in that year. Besides, the reason for the decline is due to the economic situation.


Our country's economy is not good, originating from the effects of the world economy; due to the high bad debt ratio, reducing the source of lending capital, plus the provision for risk to handle bad debt, reducing after-tax profits, plus the total assets increasing over the years, leading to a decrease in ROA; in addition, the appearance of foreign banks increased competition in banking activities, dividing the profits of domestic banks. In the period from 2013 to 2015, ROA tended to decrease slowly, due to the process of handling bad debt. By the end of 2016, for the first time, ROA increased slightly after a continuous decline over the years. In 2017, the ROE index increased sharply, the process of handling bad debt has had certain successes and our country's economy is gradually recovering. The highest ROA index this year is in mid-range banks such as TCB (2.39%), closely following TCB are VPB (2.32%), MBB (1.11%), HDB (1.02%), and OCB (0.97%). It can be seen that non-state-owned banks have a large advantage in this index and the lowest are SCB (0.02%), NCB (0.031%), MSB (0.1%), VAB (0.15%).

Return on equity (ROE) analysis


Similar to the return on assets (ROA), the return on equity (ROE) is calculated by dividing the profit after tax by the equity, which means how much net profit is generated from 100 dong of equity. The higher the ROE ratio, the more it proves that the enterprise is using shareholders' capital effectively, which means that the enterprise has harmoniously balanced shareholders' capital with borrowed capital to exploit its competitive advantage in the process of capital mobilization and expansion. The average result of this ratio over the years from 2008 to 2017 and the fluctuation trend are shown in Table 1.7 and Chart 1.7.

Table 2.6 Average ROE of 24 Vietnamese commercial banks from 2008-2017


(Unit: %)


Year

Average

% Change

Highest

Bank Name

Lowest

Bank Name

Standard deviation

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