Bancassurance becomes main source of service income for banks in Vietnam

| 13 Aug 2019

Bancassurance has now become the main source of income from services for many banks and its contribution to banks is expected to increase.

Analysts from the Saigon Securities Incorporation (SSI) forecast that insurance premiums through bancassurance will grow by about 30-40% this year. Bancassurance will also become one of the most preferred sales channels of the insurance market, contributing 14% to total insurance premiums, reported Vietnam News.

According to experts, increasing profit from service fees in general and bancassurance, in particular, is the right strategy for banks, given that the central bank is tightening credit growth.

As an example of the growing importance of bancassurance to banks, at the Tien Phong Commercial Joint Stock Bank (TPBank), income from bancassurance contributed only 17% to the bank’s total service revenue in 1Q2018 but the proportion surged to 31% in 1Q2019.

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Bancassurance became the fastest growing service segment for TPBank in 1Q2019 when it jumped five times to VND86bn ($3.7m) over the corresponding period of last year. The high growth momentum continued for TPBank in 2Q2019. The rise helped the bank’s income from bancassurance reach more than VND249.4bn in the first half of the year, double that for 1H2018 and accounting for 41% of the bank’s total service income.

Similarly, Asia Commercial Joint Stock Bank (ACB) is estimated to have earned VND350bn from bancassurance in 1H2019, 2.5 times higher than in the corresponding period of 2018. In 2019, bancassurance is expected to bring revenue of roughly VND600bn for ACB, three times higher than last year.

Asia's Bank Partner of the Year: Techcombank, Vietnam

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