Military Bank prioritizes expansion of customer base, transaction scale: chairman

Leading commercial lender Military Bank (MB) will extend priority to customers in all segments and offer customized services as it seeks to set itself apart from its peers, says chairman Luu Trung Thai.

This will be a key part of a three-pronged strategy which will “expand MB's customer base and scale of transactions; intensify focus on retail banking, create new products and enlarge retail scale; and invest in platforms and digital platform business,” he said at an online conference between the bank, listed on the Ho Chi Minh Stock Exchange (HoSE) as MBB, and investors.

The conference attracted the participation of over 300 representatives of investment funds and securities companies, both domestic and international.

Thai elaborated that the three-pronged strategy was attached to two backbone issues – “outstanding smart risk management and building a corporate culture with identity, sustainable development and high ability to learn and be creative.”

“Instead of only prioritizing customers with large assets, MB will focus on customers in all segments. We want to entice customers to mainly conduct their transactions on MB platforms; and then increase services suitable to each segment.”

As of August 4, 2024, the number of MB customers had risen to 28 million, or about 28% of the country’s population.

Banking-as-a-Service (BAAS)

One of the highlights of the conference was a presentation by vice chairman Vu Thanh Trung on MB’s deployment of the Banking-as-a-Service (BAAS) model, which allows the offering of banking products and services by non-banking companies through API technology or platforms. It is also known as embedded banking, and is a specific subtype of embedded finance.

MB currently has about 1,200 APIs, the highest number in the Vietnamese banking system, allowing customers to optimize cash flow management with absolute security.

“For partners, large or small, we are committed to integrating our banking services into partners’ platforms within just three working weeks,” Trung said.

MB started building its BaaS center in 2021. In 2022, when the bank officially began offering BaaS, it had 112 customers.

The number increased to 12,688 customers by end-2023, 113 times higher than in 2022 and the highest in the domestic market. The lender expects the number of BaaS customers to reach 150,000 by the end of this year.

The value of transactions via BaaS at MB currently holds the number one position in the market, expectedly reaching VND500,000 billion ($19.89 billion) by the end of this year.

Chairman Thai said: “BaaS is a special service suitable for businesses following the chain model as it helps automate sales processes quickly. This is a new and very promising direction.”

A pre-tax profit leader

MB’s pre-tax profits reached VND13,428 billion ($534.29 million) in the first half of the year, up 5.4% year-on-year. Member companies accounted for 5% of the total. The increase in profit was achieved despite a rise in provision costs.

MB’s H1 pre-tax profit was the fourth highest figure in the Vietnamese banking system, chief financial officer Nguyen Thi Thanh Nga told investors.

The bank continued to maintain a market-leading CASA (current account savings account) of approximately 38.83% of total deposits thanks to its large customer base and transactions via digital channels. This advantage helps MB save on capital costs and increase business efficiency significantly.

Its credit expanded 9.4% year-on-year in the period, while the average figure of the Vietnamese banking system was 6%, according to the State Bank of Vietnam. Alongside this, credit quality improved continuously, Nga stressed.

Notably, strict controls saw the bank’s non-performing loans (NPL) fall to below 2%. It was 1.64% and 1.42% in consolidated and non-consolidated financial statements, respectively.

Net interest income (NII) levelled off as interest rates in the first half of 2024 were lower than the same period in 2023 and the bank proactively implemented interest rate support programs for customers in line with the Government and State Bank’s policies. However, net fee income (NIF) grew 48% year-on-year.

The bank’s card activities also recorded outstanding results. Revenue from cards soared 43% year-on-year.

"After four years of implementing diverse models, MB has the highest number of cards in the market, with surging spending. The number is expected to increase significantly in the coming time," Nga said.

Revenue from insurance declined 5%, but the situation is expected to improve in Q4 and recover strongly in 2025. MB's insurance arm MB Ageas Life remains at the top position in terms of bancassurance.

"Attractive" stock with low P/B ratio

Phan Phuong Anh, general director of MB Securities (MBS), noted that MB ranked first in Vietnam in the number of customers. It was a top 4 bank in the country in terms of profit, total assets, and market share in outstanding loans.

"The P/B (price to book) ratio of MB is quite low, about 1.2 times compared to the industry average of 1.8 times. It can be seen that MBB shares are priced quite attractively among the Top 10 banks based on P/B ratios or asset quality," Anh said.

Dam Nhan Duc, chief economist of MB, said regarding the national economy, “the most difficult period has passed”.

The service and tourism sectors have recovered relatively strongly while manufacturing, especially the FDI sector, has performed positively. Together, these sectors will form a driving force for Vietnam’s economic growth in the last six months of this year, he noted.

On the HoSE, the bank’s MBB shares closed Tuesday at VND23,400 ($0.93) apiece.