General Assessment of the Business Performance of Vietnamese Joint Stock Commercial Banks

The Foreign Ownership dummy variable (FOR) has an impact coefficient of 0.0252 with a statistical significance level of P-value = 0.002 < 5%. The FOR dummy variable is included in the model to test the impact of the ownership structure factor - specifically Foreign Ownership on the technical efficiency of the bank. The impact coefficient is positive (+), indicating a positive relationship between the ownership ratio of foreign investors and the technical efficiency of the bank. Accordingly, the higher the ownership ratio of foreign investors, the more efficient the bank operates. This result is similar to the author's expectation of the relationship between the foreign ownership ratio and the efficiency of bank operations. At the same time, the result is also consistent with previous studies measuring this relationship. The Market Share variable (MARKSHARE) has an impact coefficient of 0.0442 with a statistical significance level of P-value = 0.032 < 5%. The variable MARKSHARE is included in the model to analyze the impact of lending market share on the technical efficiency of banks. The results show a positive impact of lending market share on the operational efficiency of banks in the research sample. This result is similar to previous studies by Nguyen Viet Hung (2008), Evgeni Genchev (2012); Tran Huy Hoang and Nguyen Huu Huan (2016) and the author's expected sign. The larger the market share, the lower the bank's operating costs and the improved operational efficiency.

High.

The variable Non-performing Loan Ratio (NPL) has an impact coefficient of -0.0387 with a statistical significance level of P-value = 0.049 < 5%. Thus, the NPL has a negative impact on the technical efficiency of the bank, specifically, when NPL increases by 1 unit, TE decreases by 0.0387 units. This result is similar to the expectation of the (-) sign of the author and previous studies. The results also show the current situation of hot credit growth in the period 2013 - 2018. During this period, banks focused on rapid credit growth while their risk management capacity was limited. In particular, some small-scale commercial banks or those that have just implemented M&A because they could not control the hot growth situation, caused bad debt to increase, affecting the efficiency of the bank's business operations. Compared to other independent variables, NPL is the variable that has a significant impact on the efficiency of the banks' business operations. Thus, to improve business efficiency, the

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Vietnam Joint Stock Commercial Bank needs to perform well in credit risk management such as: loan appraisal, inspection and supervision, compliance with lending regulations on credit limits and credit policies. These measures will contribute to reducing costs, increasing profits and improving business efficiency for the bank.

The variable Gross Domestic Product (GDP) growth rate has an impact coefficient of 0.0135 with a statistical significance level of P-value = 0.003 < 5%. Thus, the GDP growth rate has a positive impact on the business performance of banks. This result is similar to the research of Gull et al. (2011); Bandaranayake and Jayasinghe (2013); Nguyen Quang Minh (2015) and coincides with the author's expected sign. Thus, it can be concluded that the GDP growth rate of the previous year will affect the business performance of commercial banks in the following year or that the business performance of the commercial bank system is affected by the macro variable GDP with a certain lag. The results show that when the economy grows, the number of enterprises increases, at the same time, enterprises expand their production and business activities, leading to an increase in capital demand, greatly affecting the process of capital creation and capital use of banks.

The variable Debt/Total Assets Ratio (DTA) has an impact coefficient of -0.0037 with a statistical significance level of P-value = 0.002 < 5%. Thus, the Debt to Total Assets ratio has a negative impact on the operational efficiency of banks. This result is similar to the research of Nguyen Viet Hung (2008), Nguyen Quang Minh (2015) and the author's expected sign (-). Meanwhile, author Dang Thi Minh Nguyet (2017) found a positive correlation between the Debt to Total Assets ratio and the technical efficiency of banks. However, this study was only conducted in the case of Vietinbank, so the difference is inevitable. It can be concluded that not all banks that lend more will have higher efficiency. The more credit is expanded, the more risks banks face. In this case, if the bank does not have an effective credit control process, it will increase the rate of overdue debt, increase the cost of handling bad debts, management costs,... and the ultimate consequence is a decline in business operations.

The Cost/Income Ratio (CPTN) variable has an impact coefficient of -0.0084 with a statistical significance level of P-value = 0.000 < 5%. The results show the negative impact of the Cost/Income Ratio on the technical efficiency of the bank. Specifically, when the CPTN variable increases by 1 unit, the technical efficiency of the bank will decrease by 0.0084 units and vice versa. Thus, the cost to generate one unit of income will have an opposite impact on the technical efficiency of the bank and to increase efficiency, commercial banks are forced to find ways to reduce costs or improve cost control efficiency. The results are consistent with the research of Nguyen Viet Hung (2008) and the author's expected sign (-). Moreover, the actual operation of banks also shows that the more costs increase, the more bank profits decrease and the more operating efficiency decreases. Currently, banks often seek to reduce operating costs to save costs. Another way banks can try is to increase the efficiency of each dollar of bank expenses. That is, instead of reducing expenses, banks can increase investment in breakthrough products and services to increase income.

Thus, the results of estimating the Tobit regression model on the impact of factors on the efficiency of bank operations (TE) show that there are 5 factors that have the same impact direction: QMTS, VCSHTS, FOR, MARKSHARE and GDP; 4 factors have the opposite impact direction: STATE, NPL, DNTTS and CPTN.

2.3 General assessment of business performance of Vietnamese commercial banks

2.3.1 Discussion on the results of measuring business performance

2.3.1.1 Results of measuring business performance using the traditional approach After calculating and analyzing traditional indicators, the author draws conclusions about the business performance of 29 Vietnamese commercial banks in the research sample.

2013-2018 period as follows:

Capital efficiency

The author uses two indicators: return on equity (ROE) and capital mobilization efficiency to evaluate the capital utilization efficiency of Vietnamese commercial banks. The results show that some commercial banks have good capital utilization efficiency. In particular, large and medium-sized banks have better capital utilization efficiency than small and medium-sized banks.

small banks. In 2015, due to difficulties caused by the economy, the capital efficiency of banks decreased sharply. A series of banks carried out internal restructuring, mergers and consolidations in the period 2013-2015, which also made 2015 the point where the ROE index fell in 6 years. In the period 2016-2018, the economy recovered, the operations of joint stock commercial banks gradually stabilized, and after-tax profits increased at a faster rate than the growth rate of equity and mobilized capital. This led to an increase in ROE and capital efficiency of joint stock commercial banks in the research sample during this period. In 2018, the average capital efficiency of joint stock commercial banks was the highest in the whole period, however, up to 14-29 joint stock commercial banks had lower efficiency than the industry average. According to Dupont analysis, this result can be due to 3 factors: operating profit ratio, asset turnover or capital multiplier. Joint stock commercial banks need to have measures to improve operational efficiency, increase asset exploitation efficiency and choose a reasonable capital structure to improve capital use efficiency.

Asset utilization efficiency

To evaluate the efficiency of asset use, the author uses two indicators: return on total assets (ROA) and efficiency of asset use in non-credit activities. The results show that the average ROA in the period of 2013-2015 tends to decrease. The reason comes from the impact of economic recession and the accumulated risks of the banking system, causing the net profit of banks to decrease or increase but at a slower rate than the growth rate of total assets. According to Dupont analysis, ROA depends on two factors: operating profitability ratio NPM and asset turnover AU. Therefore, the decline in ROA of some banks in this period can be attributed to two reasons: decreased operating profitability ratio (not yet implemented well in cost management, unreasonable service pricing policy); decreased AU asset turnover (not yet effectively developed revenue from non-credit activities, service activities). 2015 also witnessed a decline in the efficiency of using assets for non-credit activities of banks. According to statistical results, commercial banks with low efficiency of using assets for non-credit activities are mainly small-scale banks that have not paid due attention to developing e-banking services. Even,

With a large initial investment cost, some banks have negative non-interest income. In the period of 2016 - 2018, banks actively improved their governance and management, focusing on increasing non-interest income, so the efficiency of asset use increased. In addition, the increase in asset use efficiency is also due to the positive impact of solutions to promote banking activities and economic development of the Government and the State Bank.

Labor efficiency

The author uses two indicators: pre-tax profit per employee and average income of bank employees to evaluate the labor efficiency of Vietnamese joint stock commercial banks. Regarding average income, banking is still an industry with stable and high income compared to the general level. However, the quite high standard deviation shows a large salary difference between bank employees. Specifically, the income of employees in joint stock commercial banks with state capital and large-scale joint stock commercial banks is higher than that of employees in small-scale joint stock commercial banks. The pre-tax profit per employee indicator also has a large difference between banks throughout the period. In general, the labor productivity of employees in large banks (Vietcombank, Vietinbank, BIDV, ...) is often higher than that of small banks (reflected in the higher profit before tax index of employees). In addition, this period witnessed a significant improvement in the efficiency of labor use of banks such as MSB, PG Bank, ACB, ... and especially Techcombank. This is the result of the improvement in the quality of human resources of banks. In particular, labor productivity of employees improved the most in banks with large contributions from service revenue. This shows that banks can take advantage of existing machinery and equipment to increase service revenue without having to increase too much human resources.

Cost control efficiency

To evaluate the effectiveness of cost control, the author uses two indicators: operating cost efficiency and total asset cost ratio. The results show that in the period 2013-2014, the cost control efficiency of banks was relatively low, reflected in the low operating cost efficiency indicator. In addition, although the total asset cost ratio decreased, it was not due to a decrease in costs but due to the growth rate of assets of banks.

Joint-stock commercial banks in 2013 and 2014 increased faster than the growth rate of costs. The peak of cost control efficiency was in 2015 - the time when some banks had to restructure, pushing up costs. The period 2016-2018 marked an improvement in cost management of the joint-stock commercial bank system. At this time, under the impact of the economic growth cycle, the initiative of joint-stock commercial banks in developing new services and improving service quality, and after-tax profits improved significantly. The growth rate of costs in this period was still high (higher than the growth rate of assets), reflecting the investment of banks in developing products and services; management costs; operating costs;... However, the growth rate of after-tax profits was higher than the growth rate of costs, showing that the investment of some joint-stock commercial banks was somewhat effective. Overall, the 2013-2018 period marked an improvement in cost control efficiency, but this was uneven across banks. There are still many banks with low cost control efficiency that need to be improved in the coming time.

 Risk prevention effectiveness

The author evaluates the risk prevention effectiveness of Vietnamese commercial banks by using two indicators: credit risk provision ratio and minimum capital adequacy ratio (CAR). The results show that during the 2013-2018 period, banks have made great efforts in debt collection, debt settlement, and loan monitoring, so credit quality has been increasingly improved. The average risk provision ratio tends to decrease, most banks have this ratio <1.5%, demonstrating that the quality of loans is increasingly improving. However, there are still some banks with a fairly high credit risk provision ratio and many problem loans. This situation requires commercial banks to focus on risk management, especially credit risk. Regarding the minimum capital adequacy ratio, all 29 commercial banks in the research sample have a CAR ratio > 9% and large-scale commercial banks have lower CAR ratios than small-scale banks. In fact, maintaining a moderate CAR ratio (13-14%) is enough to create a healthy protective layer, effectively preventing risks in banking operations. However, it is understandable that some commercial banks maintain a fairly high CAR ratio during this period. Business activities in the banking sector have

specific characteristics, prioritizing sustainable development over chasing immediate profits. Therefore, in the restructuring phase and the economy is growing after recession, maintaining a high capital adequacy ratio will help improve risk prevention efficiency, ensuring that banks are able to respond to the worst possible scenarios.

Management and operation efficiency

To evaluate the management and operation efficiency of banks, the author uses the following indicators: growth rate of total assets, growth rate of outstanding loans and growth rate of net income. The growth rate of total assets of joint stock commercial banks is not uniform throughout the period. In 2015, under the pressure of reducing the bad debt ratio, the average growth rate of total assets of the system decreased sharply. Net income of joint stock commercial banks increased steadily throughout the period (2013-2018). Vietnamese joint stock commercial banks increasingly focus on service development, so non-interest income is increasing. From there, the total income of banks tends to increase, the large growth rate increases the efficiency of business operations. The growth rate of outstanding loans of Vietnamese joint stock commercial banks is also at a reasonable level (10-20%). The growth rate of outstanding loans of commercial banks in the research sample decreased sharply in 2014 and 2018. This is the result of the intervention of the SBV, specifically: in 2014, the SBV reduced the operating interest rate to unblock credit, in 2018, the SBV tightened credit for areas with high potential risks. In general, the management and operation of some Vietnamese commercial banks need to be improved, especially the management and control of credit quality.

The results of data analysis collected from the annual reports of 29 Vietnamese commercial banks in the period 2013-2018 show that the system of commercial banks has good business performance with a safety ratio of CAR > 9%; ROA, ROE reaching a fairly high rate, with appropriate credit and income growth rates and some banks have performed well in cost management, ensuring stable income growth. Besides, there are still some banks operating inefficiently, with reduced income, low asset growth rates, and low or even decreasing debt. The cost management of some banks is not good, so cost efficiency is low, profits are not high, and there is a downward trend. In particular, the period 2013-2015 witnessed a decline in all aspects of efficiency of

banks such as: efficiency of capital, assets, labor,... due to subjective and objective factors. By the period 2016 - 2018, basically the efficiency aspects of commercial banks have been improved and increased rapidly. The analysis results also show that the difference in efficiency between banks in the research sample is quite large (the standard deviation of the indicators is very high).

2.3.1.2 Results of measuring business performance using a modern approach

After evaluating the business performance of the Vietnamese commercial banking system using a modern approach using two methods: data envelopment method (DEA) and stochastic frontier analysis (SFA), the author draws the following conclusions:

Firstly, the group of banks with dominant state ownership has higher technical efficiency than the remaining group.

The most efficient banks among the 29 joint stock commercial banks in the research sample are: BacABank, BIDV, VietABank, Vietcombank, Vietinbank, VPBank. These banks have average efficiency over the period 2013 - 2018 greater than 70% according to both approaches (DEA and SFA). With the calculated technical efficiency, the banks in this group have effectively used 70% of the input factors to create output. Of these 6 banks, 3 joint stock commercial banks have dominant State ownership: Vietcombank, Vietinbank and BIDV. In the research sample, the banks with the lowest operating efficiency (technical efficiency below 50%) include: Sacombank, MSB, NCB, ... and the lowest is Pvcombank. All of these banks do not have dominant State shares. Thus, the group of banks with dominant State ownership has higher technical efficiency than the remaining group. The reason may be that these banks have advantages from capital mobilization, better risk management, wide transaction network and receive high trust from customers thanks to the State ownership factor.

Second, the scale and duration of operation have a positive impact on the efficiency of bank operations.

In terms of scale of operations, the group of highly efficient banks is found to include large-scale banks with large total assets and long-term