Factors affecting the profitability of listed commercial banks in Vietnam: Does agriculture finance matter?

Thanh Cuong Dang
Vinh University

Thi Bat Nguyen
Hung Vuong University

Thi Yen Nguyen
Vinh University

Thi Hang Trinh
Vinh University

Thi Thao Banh
Vinh University

The aim of this study is to examine the factors affecting the profitability of listed commercial banks in Vietnam. The data is collected from balance sheets and income statements (audited financial statements) over the period of five years, spans from 2015 to 2019. The sample consists of 12 commercial banks listed on Ho Chi Minh Stock Exchange. The findings from the analysis are as follows. First, equity is positively related with bank profitability indicating that higher equity leads to better performance. Second, operating cost is inversely related with bank profitability suggesting higher operating can be detrimental to bank performance. Finally, agriculture financing is positively and significantly related with bank performance. This indicates that a high share of agricultural finance in the total financing can positively impact the banks’ profitability. The findings have several policy implications which are provided in the last section. The directions for future research are also clearly identified towards the end of the paper.

Key words:commercial banks, equity, operating expenses, agriculture finance, profitability, Vietnam

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