Insurance revenue in the first quarter of many banks was only 50% of the same period last year, 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 increasing bad debts, is also the decline of the insurance sector - a field considered the "golden goose" in recent years.
In terms of amplitude, Vietnam International Bank (VIB) and Tien Phong Bank (TPB) had the sharpest declines. In the first quarter of this year, TPBank's revenue from business services, insurance services and consulting services recorded more than VND 116 billion, down by half compared to the same period last year. Similarly, VIB's revenue from insurance commissions also decreased by nearly 50%, from VND 214 billion in the first quarter of 2022 to VND 118 billion.
MB - the leading bank in insurance activities despite not having an exclusive agreement - also recorded a revenue decrease 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.
Despite its smaller scale, SeaBank's revenue from this segment also decreased by more than 50%. Revenue from insurance agency services of this bank only reached more than VND22 billion in the first quarter of this year, compared to nearly VND50 billion in the same period last year.
Several other banks have exclusive agreements on insurance distribution but did not disclose details of revenue from this segment in the first quarter.
The decline in the insurance segment is part of the reason why service revenue of many banks is lower than the same period last year.
Of the 27 banks listed and traded on the stock market, 11 banks recorded a decrease in net service profit in the first quarter of this year, including MBB, SeaBank and VIB - banks that recorded a decrease in insurance revenue.
MB's net profit from service activities only reached nearly 700 billion VND in the first three months of this year, compared to 1,100 billion VND in the same period last year. Vietcombank, SeaBank, Sacombank led the way with a decrease of 47-57%. NCB was the only bank with a net loss from service activities.
For TPBank, despite a sharp decline in the insurance segment, the bank still recorded a 36% increase in net service income over the same period thanks to revenue from payment services and other activities. Similarly, a number of other banks had high service activities in the first quarter such as VPBank, VietinBank, SHB, BIDV and HDBank.
Bancassurance, a combination of the two terms bank and insurance, has been considered a "gold mine" for banks in recent years. This type of cross-selling helps insurers exploit a large customer base from banks, minimizing expansion costs; while banks increase revenue, taking advantage of customers buying insurance to promote other services.
In the first half of 2022, premium revenue through the Bancassurance channel alone accounted for 41% of total new business revenue of insurance companies. This ratio is forecast to soon reach 50% of total new business revenue, helping banks surpass agents to become the main revenue-making channel for insurance companies.
However, the "golden goose" of banks is also revealing many problems.
Along with the upfront fees of thousands of billions of dong and high commission rates, there is pressure on sales (KPI) that banks must meet with insurance companies. This pressure is then transferred to the very people who provide insurance advice - transaction or credit staff.
Last year, many people reported the fact that bank loans required them to buy insurance. Some customers also said they were given incorrect advice, leading to them spending money to buy insurance disguised as "savings and investment" products.
Earlier this year, in the context of many problems in insurance sales through banks, some banks removed the name of insurance sales KPI, instead calling it differently or including it in the fee KPI.
At a top private bank in the market, the life insurance sales target was replaced by the "net fee revenue" target, calculated from the fees for credit products, business loans, consumer loans, and insurance sales. At another private bank, the "fee collection from insurance sales" target was changed to "financial consulting fee collection".
Minh Son
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