Financial Performance of the Vietnam Banking Industry

Abstract

The aim of this study is to examine how internal determinants and external determinants affect the profitability of the two bank group in Vietnam namely state-owned banks and joint stock commercial banks. Measuring the profitability in term of return on asset (ROA) for a panel of tow banks group can give a general idea about the effects of these factors to banking system.

For this analysis, a panel regression methodology will be applied to investigate the performance of these state-owned banks and joint stock commercial banks within Vietnams banking system empirically in a period between 2005 and 2012. The result shows that it is true that the banks in Vietnam have been experiencing profitability over the last eight years. Besides, profitability of the joint stock commercial banks was only influenced by four internal determinants and one external determinant namely capital adequacy ratio, deposit, non-interest income, bank size and GDP. Meanwhile, the profitability of state-owned banks during these years has been mainly influenced by internal determinant namely bank size.