Vietnam Bancassurance

Macroeconomic strength has supported bancassurance expansion. Vietnam’s GDP per capita has been steadily increasing and should reach $3,900 in 2022. The government targets GDP per capita of $5,000 by 2025 and for Vietnam to achieve developed market status by 2045.

Solid outlook underpinned by rising middle class wealth and low penetration. Gross life written premiums have grown at a 26% CAGR over 2016-21, and bancassurance sales have increased at a much faster rate of 63% CAGR over the same period. However, only 11% of Vietnam’s population participated in life insurance in 2021, which is far below more developed markets such as Malaysia (~50%). In addition, life premiums were just 2% of total GDP in 2020 vs. 3.1% in Thailand.

The bancassurance channel accounted for 39% of total life insurance sales in 2021 on an annual premium equivalent (APE) basis. We expect this ratio to reach 50% by 2025E.

Bancassurance is also a key earnings driver for the banks. As the commercial banking system develops, individual banks’ income will gradually become less heavily dependent on lending, and fee income will thus take on a more crucial role as an earnings driver going forward.

Bancassurance accounted for an average 37% of total fees for the listed banks in 2021 (figure 14). We expect the bancassurance sales contribution at CTG, VCB, TCB, VPB, MSB, and STB to increase substantially following recent tie-ups with their respective insurance partners. Thus, we expect total bancassurance sales to reach about 50% of total fee income for the sector by 2025E.

We continue to recommend high-quality banks as our top picks, all of which offer high potential for increased bancassurance sales: ACB, MBB, and VCB. ACB ranked No.1 in total APE sales in 4M22, followed by MBB.

For the complete report, please access here: Banacassurance_Report_2022

Analyst: Tanh Tran, tanh.tran@yuanta.com.vn