New policy may have adverse impacts on bancassurance

A new regulation on banning commercial banks from selling insurance together with banking services will negatively affect banks’ bancassurance revenue in the future, some analysts have claimed.

New policy may have adverse impacts on bancassurance -0
A contract of a life insurance policy purchased through a bank. Under the Law on Credit Institutions, bancassurance activities will be more strictly managed, which will cause the growth of income from bancassurance of banks to slow down compared to the 2019-21 period. VNA/VNS Photo

The regulation under the amended Law on Credit Institutions was recently passed by the National Assembly and will take effect from July this year.
According to broker MB Securities, with the passing of the law, bancassurance activities will be more strictly managed, which will cause the growth rate of income from bancassurance of banks to decline compared to the 2019-21 period.

Sharing the same view, Yuanta Vietnam Securities also believes the new regulation will greatly affect banks whose fee income mainly comes from bancassurance.

In fact, revenue from selling insurance through banks (bancassurance) decreased sharply in the first nine months of 2023.

According to banks’ Q3 2023 financial reports, there were eight banks giving detailed information about income from insurance activities, of which all except PG Bank, recorded a decrease in insurance revenue. In the first nine months of 2023, the total insurance revenue of the eight banks reached more than 9.4 trillion VND, down 26.1% over the same period last year.

MB saw revenue from insurance sales decrease by 16.9% to nearly 5.99 trillion VND in the first nine months of 2023. The decrease in revenue caused the bank’s net profit from insurance activities to drop by 28.21% to more than 2.1 trillion VND. In the same period of 2022, insurance brought MB more than 7.2 trillion VND in revenue and more than 2.9 trillion VND in net profit.

VPBank's revenue from insurance activities also decreased from 2.44 trillion VND in the first nine months of 2022 to 1.86 trillion VND in the first nine months of 2023, a decrease of 23.6%.

Techcombank, VIB and TPBank also saw revenue from insurance activities to decrease from more than 1.06 trillion VND, 936 billion VND and 661 billion VND to 458 billion VND, 689 billion VND and 291 billion VND, respectively.

According to Vietcombank Securities Company (VCBS), income from bancassurance in the banking industry last year was affected after some banks were found to have fraud and coercion bancassurance to banks’ customers in July last year.

At the same time, bancassurance business last year was also less positive as people's income decreased due to economic difficulties. VCBS estimated profits from insurance premiums in 2023 to decrease by some 10-15% compared to the previous year.

Economy

Localities report progresses in IUU fishing combat
Economy

Localities report progresses in IUU fishing combat

Coastal localities nationwide have implemented practical and effective activities and specific measures, demonstrating their determination to join the nation’s efforts to have the “yellow card” that the European Commission (EC) has imposed on Vietnamese seafood regarding illegal, unreported, and unregulated (IUU) fishing lifted in 2024.

Da Nang Hi-Tech Park attracts 177-million-USD FDI project
Economy

Da Nang Hi-Tech Park attracts 177-million-USD FDI project

The Da Nang Hi-Tech Park continues to strengthen its position as a leading investment hub with the recent in-principle approval of a 177-million-USD project by Dentium Co., Ltd., from the Republic of Korea (RoK).This significant investment brings the total registered foreign direct investment (FDI) in the park to 875.2 million USD, spanning 13 projects.

UNGA President congratulates Vietnam on re-election to UNCITRAL
Economy

UNGA President congratulates Vietnam on re-election to UNCITRAL

Ambassador Dang Hoang Giang, Permanent Representative of Vietnam to the United Nations (UN), had a meeting in New York on November 21 with President of the 79th session of the UN General Assembly (UNGA) Philemon Yang who congratulated Vietnam on the country’s re-election to the UN Commission on International Trade Law (UNCITRAL) for the 2025-2031 term.