In 2022, in the context of the economy and banking industry facing many difficulties and challenges, under great pressure from unpredictable fluctuations of the world and domestic economy, but Cooperative Bank of Vietnam (Co-opBank) has made great efforts to fulfill its role as the Bank of all People’s Credit Funds (PCF), continued to improve the quality of its operations, improved its financial capacity, and continuously modernized to support PCFs system to develop stably into the digital era.
The transition from the activeness.
2022 was the first year since Co-opBank changed its model, deposits of the PCF system decreased sharply by 32.06% compared to the same period in 2021, with only VND 24,309 billion. However, with the activeness in the expansion of capital mobilization such as: launching the emulation of capital mobilization in the whole system; using the refinancing loan tool of SBV… the total working capital of Co-opBank as of December 31, 2022 was VND 49,799 billion, an increase of 1.33% compared to December 31, 2022. In particular, the total balance of CASA was VND 1,223.7 billion, an increase of VND 426.4 billion compared to December 31, 2021 (53.4% higher), contributing to Co-opBank’s reduction in capital costs, thereby have more conditions to support the PCF system, businesses and people.’
Co-opBank Mobile Banking has become popular to PCFs members and individual customers
Quality expansion goes parallel with credit risk control through strictly controlling of lending and post-lending processes, improving the quality of each branch operations. Co-opBank also continues to increase its financial capacity through bad debt settlement and recovery. As of December 31, 2022, the balance of bad debts on the balance sheet of the whole system was VND 144 billion (equivalent to 0.46% of total outstanding loans), of which the bad debt balance on the balance sheet for businesses and individuals was VND 113 billion (equivalent to 0.44% of outstanding loans to businesses and individuals); Bad debt balance on the PCF’s balance sheet was VND 31.5 billion (equivalent to 0.56% of PCFs. outstanding loan balance). The ratio of bad debts according to Resolution 42 of the whole system (excluding debt handling risks) was 0.84%. In 2022, Co-opBank branches recovered VND 161 billion of bad debts. At the same time, loan provision was VND 211 billion, reaching 129% of the plan in 2022.
In 2022, Co-opBank will continue to implement digital transformation, promote non-cash payments and modern banking products to supply the PCF system and the economy such as traffic payment connection (Vinbus) for Co-opBank Napas chip card and connect card payment with BC Card (ISS direction) allowing Co-opBank Napas chip card to make payment transactions in Korea; added more utilities for Co-opBank Mobile Banking, upgrading CF-eBank e-banking system with more features and better experience for customers.
The urgent requirement of improving financial capacity
Constantly improving and increasing financial capacity and service provision is a premise in 2022, Co-opBank continues to perform well in two roles, one is supporting the PCF system to ensure liquidity and expand lending to members; The second is becoming a state-owned commercial bank to collaborate with the banking industry and the Government to support businesses and people to reproduce and expand investment in the post-Covid-19 new normal situation.
As of December 31, 2022, Co-opBank’s total outstanding loans reached VND 31,185 billion, an increase of VND 4,987 billion (19.04% higher) compared to December 31, 2021, of which: Outstanding loans of PCFs was VND 5,590 billion, 60.57% higher; Outstanding loans for businesses and individuals were VND 25,574 billion, 12.58% higher.
On the other hand, Co-opBank continues to implement the lending program “Joining hands to support PCF members with low interest rates (minimum 4.8%/year) in order to share difficulties with PCFs’’ members during the first 10 months of 2022. In addition, Co-opBank continues to implement the policy of operating lending interest rates for PCFs lower than lending rates for businesses and individuals at all times.
Besides providing capital to enterprises and individual customers, Co-opBank continues to maintain the program “Co-opBank accompanies customers” to help enterprises and individuals having opportunities to access low-interest loans financial resources so that they can overcome difficulties to restore business activities with the lowest lending interest rate of 5.0%/year.
Co-opBank’s E-Banking system was completed by the end of 2022 to replace the CF-eBank system, which had basically ensured the full functionality of a modern payment system serving the entire PCFs system. Co-opBank’s E-banking system has expanded nationwide with 761 transaction points, including 32 branches, 66 transaction offices and 663 PCFs. Total revenue of money transfers transactions going through the Co-opBank payment system in 2022 was VND 399,819 billion (equal) compared to the year before; Incoming money transfer was VND 334,959 billion (15% lower) compared to the same period last year.
In 2022, Co-opBank also free all money transfers transactions for PCFs’ members participating in the E-banking system; free transactions on Co-opBank Mobile Banking application. Thereby, it had helped Co-opBank and PCFs have many opportunities to approach new members and customers, especially in remote and isolated areas in order to complete the financial inclusion development strategy in Vietnam.
However, at present, there are a number of operational support mechanisms for Co-opBank such as: a mechanism of debt classification and provisioning analysis, and a mechanism to separately monitor loans to weak PCFs without recovery are not prohibited. The PCF system is spread over 57 provinces and cities across the country, meanwhile the network Co-opBank branches are in 30 provinces and cities; Therefore, the capital intermediation and directed support for PCFs still faces many difficulties. Co-opBank, as a leading bank of supporting nearly 1,200 PCFs, but its financial capacity is limited, which significantly affects its ability to meet capital needs of PCFs’ members, as well as performing functions and duties for the system.
Therefore, from the general situation of the system, in order to meet the requirements of supporting PCFs to develop safely and sustainably and creating favorable conditions for Co-opBank to implement restructuring solutions, SBV should early issue a mechanism for classifying debts and setting up provisions for PCFs’ loans that face difficulties, show signs of unsafe operation, and cannot be recovered. Promulgating a mechanism to deal with loans to weak PCFs outstanding loans. At the same time, SBV would consider submitting to the Prime Minister for approval to grant additional charter capital to Co-opBank in order to strengthen financial capacity to better perform the role of bank for all PCFs.
Currently, the guarantee of liquidity and solvency of PCFs system according to Decision 689/QD-TTg dated September 8, 2022 of the Prime Minister on approving the scheme to restructure the system of credit institutions associated with bad debt settlement for the period 2021-2025 and the direction of the Governor of SBV was beyond the capacity of capital sources (total capital of Co-opBank was only 1/4 of the total capital of the system). Especially at the end of the year, the pressure to support the PCF system to stabilize liquidity was extremely large. Therefore, Co-opBank urgently needs support in terms of capital in times of difficulty in general liquidity of the PCF system. Co-opBank proposed SBV to consider giving Co-opBank permission to access refinancing loan as a necessary and timely tool to support liquidity for the system.
