Agribank going from strength to strength
After 35 years in business, Agribank still maintains its position as one of the leading banks in Vietnam, with its unique place among Vietnam's rural communities.
In the 35 years since its establishment, Agribank now has the largest countrywide retail network, with nearly 2,300 branches and transaction offices. Agribank has a network system twice as large as the next biggest bank and is the only commercial bank with a presence in nine out of the 13 island districts.
In addition, Agribank also has the largest number of employees in the banking system, with about 40,000 people.
The wide coverage is a testament to Agribank’s mission to work alongside the agricultural sector, farmers, and rural communities, despite the expense of maintaining this large network and number of employees. Agribank boasts a profound understanding of the market and its customers and their communities.
The bank has also set another record with the number of its customers. On average, each Agribank credit officer is responsible for approximately 800 customers. In some localities, each credit offer is responsible for over 1,000 household customers. They have to help manage finances in different agrarian communities, especially in remote areas that are hard to reach.
Agribank boasts a sustainable structure with deposits mainly coming from residents. Currently, Agribank has up to 18 million depositing customers, of which, customers with deposits valued under VND50 million ($2,120) account for about 60 per cent of that figure. The large proportion of small deposits shows that Agribank's deposit structure is highly sustainable.
With such a large network, it is not surprising that Agribank is always at the top of the list of banks with the largest source of capital mobilisation. At the end of 2022, Agribank's capital mobilisation reached VND1.71 quadrillion ($72.5 billion), accounting for the largest market share in the country.
Agribank's competitors are some way off these figures, with BIDV at VND1.47 quadrillion ($62.3 billion), VietinBank with VND1.25 quadrillion ($53 billion), and Vietcombank with VND1.24 quadrillion ($52.5 billion).
Despite having the largest capital market share in the system in terms of outstanding credit growth and total assets, Agribank ranks second overall, behind BIDV.
At the end of 2022, Agribank's total assets reached VND1.89 quadrillion ($79.3 billion). Its outstanding loans to the economy were VND1.44 quadrillion ($61 billion). The figures at BIDV were more than VND2 quadrillion ($84 billion) and VND1.52 quadrillion ($64.4 billion), respectively.
Agribank has been unable to raise capital for many years, leading to limited credit growth and the lowest capital adequacy ratio in the group of Big 4 banks. Currently, Agribank is the only 100 per cent state-owned bank in the whole system. While the remaining banks in the Big 4 have favourable conditions to increase capital through equitisation, Agribank's capital increase is still completely dependent on the national budget. The National Assembly's appetite for an increase in capital for Agribank is somewhat limited, and the bank’s development needs are limited in that regard. Agribank is consequently falling behind other banks in terms of charter capital, which has had an impact on both the capital adequacy ratio and the potential for loan growth.
However, after 35 years, Agribank has exponentially scaled up its operations. Specifically, since the time of its establishment, Agribank's total assets, capital scale, and credit balance have increased by more than 1,600 times.
The only bank that has spent VND1 quadrillion on agriculture, farmers and rural areas
Over the years, Agribank has always spent 65-70 per cent of the total credit outstanding on providing loans to individuals and businesses involved in the agricultural sector. By the end of 2022, Agribank's outstanding loans to farmers and rural communities stood at nearly VND1 quadrillion ($42.4 billion), accounting for about half of the entire amount of outstanding loans to this sector. Nguyen Thi Phuong, deputy general director of Agribank, has said that the bank will continue to maintain this ratio into the future.
During the past 35 years, Agribank's capital has assisted the agricultural sector in carrying out many reforms. Agribank has helped over 3.5 million farming households while also facilitating the development of large agricultural economic models towards green and sustainable production, meeting the increasing demands of the world market.
With a leading role in the agricultural and farming sectors, Agribank has always been trusted by international financial institutions. The bank has implemented many credit projects for rural development in Vietnam. Agribank has established relationships with more than 680 correspondent banks in 80 countries and territories and is also renowned for receiving and implementing foreign credit projects from international donors. The bank also plays an active role on the Executive Board of International Agricultural Credit Associations.
In particular, Agribank also implements the largest amount of policy credit programmes among commercial banks. Specifically, Agribank is effectively implementing seven policy credit programmes and two national target programmes that focus on building new rural areas and sustainable poverty reduction.
Agribank has become an important player while bringing the government's preferential credit policy to many poor households and other policy beneficiaries across the country, fundamentally changing people's quality of life in farming areas.
Impressive business results and one of the country's top tax contributors
By the end of 2022, Agribank achieved an after-tax profit of about VND17.7 billion ($750,000), among the top 4 most effective banks in the system. In the last five years, Agribank's profit has tripled.
In addition, the bank's profitability indicators, such as return on assets andreturn on equity (ROE), have also continued to improve. Agribank has an ROE of over 22 per cent, ranking second in the Big 4, just behind Vietcombank. Recently, Agribank has been among the largest taxpayers in the country.
Over the past 10 years, after implementing Decision No. 53/QD-NHNN on restructuring, Agribank has made comprehensive changes. From being a bank with high bad debt, limited liquidity at times, and inefficient operations, Agribank has now become one of the top banks in terms of operational efficiency and liquidity. The bank has made a significant contribution to the economy.
Agribank's financial health has improved a lot due to the increasing number of provisions. By the end of 2022, Agribank had reduced its bad debt to 1.81 per cent. The bad debt coverage ratio was nearly 140 per cent, the highest ever. In addition, the bank has more than VND36.2 trillion ($1.53 billion) in reserve.
Last year, Agribank ranked 8th among the top 500 largest enterprises in Vietnam. The bank has been listed among the top 10 largest enterprises in Vietnam for six consecutive years, ranking first in Vietnam’s commercial banking system. Agribank’s ratings have been upgraded from Ba3 to Ba2 by the international credit rating agency Moody’s with a “stable” outlook. Agribank’s ranking and brand value has improved significantly, and the bank was at the top of the list among Vietnamese lenders in the 2022 Brand Finance Banking 500 rankings.
In its development strategy for the future, Agribank remains steadfast with the goal of being a trusted partner for farming communities and rural areas, with a focus on providing individual customers and small- and medium-sized enterprises in the sector the best possible service available.