Analysis of the impact of non-interest income on the performance of Vietnamese Commercial Banks, 2022

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

UNIVERSITY BANKING OF HO CHI MINH CITY

LE HOANG MINH

ANALYSIS THE IMPACT OF NON-INTEREST INCOME ON

THE PERFORMANCE OF COMMERCIAL BANKS IN

VIETNAM

GRADUATION THESIS

MAJOR: BANKING - FINANCE

CODE: 7340201

Ho Chi Minh Cỉty, 2022

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

UNIVERSITY BANKING OF HO CHI MINH CITY

GRADUATION THESIS

MAJOR: BANKING - FINANCE

ANALYSIS THE IMPACT OF NON-INTEREST INCOME ON THE

PERFORMANCE OF COMMERCIAL BANKS IN VIETNAM

NAME : LE HOANG MINH

CLASS: HQ06-GE10

ID : 050606180208

Instructor: Dr. NGUYEN THE BINH

Ho Chi Minh City, 2022

ABSTRACT

Increasing operational efficiency is always the top concern of many scientists

and bank administrators. In addition to income from credit activities, non-interest

income activities are receiving more attention by researchers in recent times,

especially the direction of their impact on the growth of operating efficiency of banks.

The commercial banks. The fiercely competitive business environment requires bank

managers to have new business trends in order to seek profits and increase their

operational efficiency.

Currently, there have been many studies referring to the impact of non-interest

income on profitability as well as operational efficiency of commercial banks in the

world in general and in Vietnam in particular. different conclusions. The focus of this

article is on determining the impact of non-interest income and other factors related to

the performance of Vietnamese commercial banks in the period 2009 - 2021. The

study included 26 joint stock commercial banks listed on two major exchanges in

Vietnam, HOSE and HNX, with 337 observations.

The research results show that there are 6 factors that affect and have statistical

significance on the bank's performance, including: NNII, EA, DP, SZE, CIR, INF

with significance level of 1%.

In addition, the model also records factors such as NNII, EA, SZE, CIR, INF It

also increases the bank's operational efficiency. Based on the research results, the

article has proposed a few recommendations to help Vietnam's banking industry

improve, promote competitiveness, and increase operational efficiency in the future.

COMMIT

My name is: LE HOANG MINH, student of class: HQ06 - GE10, academic

year 2018-2022 at Banking University of Ho Chi Minh City. HCM. Student code:

050606180208.

I hereby declare that: This thesis is the author's own research work, the research

results are truthful, in which there are no previously published contents or contents

made by others except All citations are fully cited in the thesis.

Ho Chi Minh City, day … month … year 2022

Sign

Le Hoang Minh

SPECIAL THANKS

I would like to express my sincere gratitude to Dr. Nguyen The Binh is the

guide, he has directly led, spent a lot of time, dedicated guidance, and at the same time

gave me extremely valuable comments and suggestions so that I could complete the

thesis. graduate.

Next, I would like to thank the teachers for taking the time to impart valuable

knowledge during the four years of studying at the school.

Finally, I would like to thank my family and friends, who have always helped,

accompanied and supported me during the writing of this article.

Best regards !

Le Hoang Minh

Table of Contents

CHAPTER 1 : INTRODUCTION TO THE TOPIC......................................................1

1.1. Question. ...........................................................................................................1

1.2. Research objectives and research questions .....................................................2

1.2.1. Objectives of the study ..................................................................................2

1.2.1.1. General objective.....................................................................................2

1.2.1.2. Own goal .................................................................................................2

1.2.2. Research question. .........................................................................................2

1.3. Objects and scope of research..............................................................................3

1.3.1. Research subjects...........................................................................................3

1.3.2. Research scope...............................................................................................3

1.4. Research Methods................................................................................................3

1.5. New point of the article........................................................................................3

1.6. Thoughts of the article. ........................................................................................4

1.7. Article layout........................................................................................................4

CHAPTER 2: THEORETICAL OVERVIEW AND EXPERIMENTAL RESEARCH

AND IMPACT OF NON - INTEREST INCOME ON THE OPERATIONAL

EFFICIENCY OF THE BANK......................................................................................5

2.1. Theoretical basis on the impact of non-interest income on the performance of

commercial banks........................................................................................................5

2.2. General introduction about the performance of commercial banks.....................8

2.3. Theoretical basis on the impact of non-interest income on the performance of

commercial banks......................................................................................................11

2.4. Review of previous studies on the effects of non-interest income on the

performance of commercial banks............................................................................14

CHAPTER 3: RESEARCH METHODOLOGY AND RESEARCH MODEL

IMPACT ON NON - INTEREST INCOME ON THE OPERATIONAL

EFFICIENCY OF THE BANK....................................................................................21

3.1. Research data .....................................................................................................21

3.2. Research Methods..............................................................................................23

3.3. Research model of factors affecting non-interest income of Vietnamese

commercial banks......................................................................................................24

3.4. Data processing sequence. .................................................................................28

CHAPTER 4 RESEARCH RESULTS AND DISCUSSION FACTORS IMPACT ON

NON - INTEREST INCOME OF VIETNAM COMMERCIAL BANK. ...................30

4.1. Research results..................................................................................................30

4.2. Discuss research results......................................................................................41

4.2.1. Impact of non-interest income on Average Return on Assets and Return on

Equity.....................................................................................................................41

4.2.2. Effect of equity to total assets on average return on total assets and return

on equity ................................................................................................................41

4.2.3. Impact of customer deposits on Average Return on Assets and Return on

Equity.....................................................................................................................41

4.2.4. Effect of bank size on average return on assets and return on equity .........42

4.2.5. The impact of the cost-to-income ratio on average return on assets and

return on equity......................................................................................................42

4.2.6. Impact of lending on total assets on average return on total assets and return

on equity ................................................................................................................42

4.2.7. Impact of inflation on Average Return on Assets and Return on Equity....43

4.2.8. Impact of growth rate on average return on assets and return on equity.....43

CHAPTER 5: CONCLUSION AND POLICY IMPLICATIONS...............................45

5.1. Impact of non-interest income on Vietnamese commercial banks. ...................45

5.2. Policy implications.............................................................................................47

5.3. Limitations of the article. ...................................................................................50

List of Tables

Table 2.1. Summary table of foreign studies (Source compiled by the author

himself) ........................................................................................................................18

Table 2.2. List of commercial banks in Vietnam .....................................................22

Table 3.1. Summary table of variables and signs....................................................25

Table 4.1 . Statistical results describe the variables................................................30

Table 4.2.2. Multicollinearity test results with variance exaggeration factor. .....32

Table 4.3. Correlation matrix between the variables in the model........................33

Table 4.4. Regression model with three models Pool OLS, FEM, REM (ROAA,

ROAE) .........................................................................................................................34

Table 4.5. Pooled OLS and FEM model selection results.......................................36

Table 4.6. Results between FEM and REM models. ...............................................37

Table 4.7. Pool model selection results OLS and REM ..........................................37

Table 4.8. The results of the test of the autocorrelation phenomenon ..................38

Table 4.9. The phenomenon of variance change test results..................................38

Table 4.10 . The results of model estimation by FGLS . method ...........................38

Table 4.11. Summary of research hypotheses and results......................................40