The Impact of Non-Interest Income on Profitability of Vietnamese Commercial Banks

Abstract

In an open economy, with significant changes in technology, competitive environment and demand from customers, banks around the world and in Vietnam have tended to diversify business activities to limit and disperse risks, increase the bank's revenue. This article aims to study the impact of non-interest income on the bank's profitability, with the following criteria: profit after tax on assets average (ROAA), profit after tax on equity average (ROEA), net interest margin (NIM) through regression models including Pooled OLS, FEM, REM,and GMM. The results show that non-interest income has a positive impact on ROAA and ROEA but has a negative impact on NIM, thereby proposing solutions to diversify non-interest business activities to improve profitability of Vietnamese commercial banks.