Hanoi (VNA) -Commercial banks are expecting the revenue from fees and retailbanking services to become their main income sources this year, asa result of rising market demands.

According to Nguyen DucVinh, general director of VP Bank, after years of investingin the financial company FE Credit, his bank is expecting to receivea large profit from the company in 2018.

FE Credit started to gainprofits from the retail banking segment in 2016, and the profit improvedcontinuously last year. VP Bank’s financial reports showed that the bank’sprofits last year hit a record high of more than 6.43trillion VND (283.25 million USD), of which FE Credit made up some 51 percent.

Vietcombank also expects tobetter exploit the potential retail banking segment this year, as itrecruited Thomas William Tobin, a Canadian foreign senior expert in retailbanking, last year, to be its retail banking director. It was the firsttime the State-owned bank appointed a foreigner in its management board,showing its priority for the retail banking segment.

Vietcombank’s chairman NghiemXuan Thanh hoped that the expert, who has expertise in global andVietnamese finance, will help the bank make a leap in the retail bankingsegment.

Vietcombank is targeting tobecome the country’s leading bank in retail segment in 2020, Thanh said.

According to Nguyen Dinh Tung,general director of the Orient Commercial Joint Stock Bank, his bank isexpected to earn a pre-tax profit of more than 1 trillion VND in 2018, thanksto specific strategies in the sales of financial products, especiallyin non-credit services.

Some other banks have alsoplanned to better exploit the potential business segment in 2018 throughmergers and acquisitions last year. Typically, Shinhan Bank Vietnam acquiredANZ’s retail banking services or the Vietnam International Bank (VIB) acquired theHCM City’s branch of Commonwealth Bank of Australia.

According to experts, banksare investing significantly in retail banking services, instead of onlyfocusing on corporate lending in the hope of gaining higher profits from thepotential segment this year.

With more than 93 millionpeople and sharply increasing consumption, Vietnam is considered a hotdestination for the retail banking segment, which is why banks havestrategically planned to boost the segment.

In fact, the in-cash habitof Vietnamese people is no longer an obstacle to the development of cardnetwork and non-credit services. Thus, several banks are aiming to givetheir customers a variety of non-traditional credit services, such assavings and transactional accounts, mortgages, personal loans, debit and creditcards.

Notably from the beginningof this year, many banks have considerably improved the qualityof their retail banking services to enhance competitiveness in themarket. They are also focusing on other aspects such as marketing, technologyand human resources to attract more individual customers to non-creditservices.

The move was decided afterthe retail banking segment contributed to a large amount of the total profitsof many banks last year. BIDV and MB Bank, for example, gained high profitslast year, thanks to a 34 per cent to 35 percent rise inretail banking services.

Nguyen Thanh Nhung, generaldirector of VietBank, said retail banking services would be a key tomaking a sustained and stable profit for the banking sector this year. Thedevelopment of non-credit services contributes to diversifying bank’s services,thereby bringing more customers. This type of service will alsodisperse risks and create higher profits for commercial banks, said Nhung.

According to Tran Du Lich,a member of the National Financial and Monetary Policy Advisory Council, bankscurrently not only gain profits from lending but also from retail bankingservices, so the move to invest in retail services is inevitable in the future.

Based on the resultsgained, leaders of commercial banks said they would continually apply thisbusiness strategy, with a focus on retail banking services next time.-VNA