“Diversifying Revenue Streams: Banks Strategize to Reduce Reliance on Credit”

In recent times, many banks have been diversifying their revenue streams by developing non-credit products and services, reaping significant profits from digital banking conveniences, payment card fees, credit card fees, asset management advisory, securities investment, and foreign currency trading, among others. This strategic shift has helped banks reduce their reliance on credit, mitigate risks, and improve their revenue structure towards long-term sustainability.

Financial reports attest to the effectiveness of this approach, as evident from VIB’s performance, with total operating income surpassing 9,700 billion VND and pre-tax profits exceeding 5,000 billion VND, a 9% increase year-on-year. Notably, non-interest income accounted for approximately 21% of the total, predominantly from services and payments. HDBank witnessed a remarkable surge in non-interest income, with a 210% year-on-year increase stemming from payments, digital banking, and foreign currency trading, in addition to a 15.8% rise in net interest income, reaching 17,227 billion VND. ABBank left an even stronger impression, with a significant improvement in non-interest income compared to the previous year: net income from services increased fivefold to 431 billion VND, while net income from other activities reached 894.5 billion VND, thirteen times higher than the same period last year, enabling the bank to accomplish 93% of its profit plan within just six months.

State-owned commercial banks also demonstrated positive results: BIDV earned over 11,000 billion VND, a 22.6% increase; VietinBank generated more than 10,000 billion VND, a 22.7% rise; and Vietcombank attained nearly 7,300 billion VND, a 20.5% growth compared to the previous year.

In addition to service and payment revenues, some banks have also increased their income through the recovery of previously written-off debts, as seen with LPBank, where non-interest income rose by 17.3%, with income from written-off debt recovery doubling compared to the same period in 2024.

Meanwhile, other banks, including Techcombank, VietinBank, Sacombank, VPBank, and ACB, have acknowledged the significant contribution of non-interest income, attributed to their multi-layered digital ecosystems and strategic leveraging of advantages in the services sector. At MB, Mr. Vu Thanh Trung, Vice Chairman of the Board of Directors, highlighted that digital transformation remains a growth driver, with key digital platforms such as the App MBBank, BIZ MBBank, and the Banking-as-a-Service (BAAS) segment contributing significantly to the bank’s expansion in terms of customer base, CASA, and revenue.

MB’s leadership recently announced a bold initiative to expand its ecosystem into the digital asset business, partnering with a top-three global leader in this field. Recognizing the potential of its 33 million customers within its ecosystem, the bank aims to offer not only banking services but also venture into fund certificates, stocks, bonds, and eventually, digital assets.

Additionally, in recent years, a notable trend has emerged, with several banks accelerating their mergers and acquisitions of securities and insurance companies to expand their market share. PGBank has approved the strategy of acquiring shares in securities, fund management, or insurance companies to become subsidiaries or associated companies, while Sacombank plans to invest up to 1,500 billion VND to own over 50% of a securities company.

According to experts, non-interest income will play an increasingly crucial role in sustaining profits, especially as the net interest margin (NIM) narrows. NIM, an indicator reflecting the difference between interest income from loans and investments and the cost of paying interest on total interest-bearing assets, has been declining, resulting in lower net interest income per unit of credit, despite expanding credit balances.

Ms. Tran Kieu Oanh, Head of Financial Services at FiinGroup’s Market Research and Consulting Division, pointed out that interest income continues to face challenges, with high non-performing loans prompting banks to increase provisions, leading to higher operating expenses. Moreover, the heavy reliance on credit has driven banks into fierce competition, forcing them to lower lending rates to retain customers, thereby compressing profit margins.

Data from the Wichart platform reveals that NIM for listed banks continued to narrow in the second quarter of 2025, reaching 3.17%, a decrease of 0.13 percentage points from the previous quarter, approaching the low recorded in the first quarter of 2019 (3.16%). As industry-wide NIM has been declining for two consecutive years, banks’ push to increase non-interest income and shift towards a more sustainable revenue structure is inevitable, helping to diversify revenue streams and foster long-term growth.