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Many banks still on course to attain goals
Vietnamese commercial banks obtained encouraging business results in the first half of the year despite the economy’s struggles.
The prolonged falls of the stock market, frozen real estate market, exchange rate fluctuations, low liquidity and tightened monetary policies were the challenges commercial banks had to face in the first half of the year. Meanwhile, the 30% credit growth rate cap made the turnover of banks which rely on credit services decrease considerably.
A lot of commercial banks have adjusted their profit targets for 2008. Instead of following an accelerated strategy, with which they made great strides in 2007, banks are now taking cautious and slow steps.
The Bank for Investment and Development of Vietnam (BIDV) announced the profit of VND604bil for the first six months of the year, an increase of 44% over the same period of last year.
However, for BIDV, one of the biggest and oldest banks in Vietnam, the figure represents just 19% of its yearly plan. The profit, in absolute value, was much lower than that of some other joint stock banks.
Sacombank, one of the biggest joint stock banks in Vietnam, has announced the profit of VND754bil, while Eximbank VND723bil and Military Bank VND480bil.
Maritime Bank said that its pre-tax profit by June 19 had reached VND175bil, and SeABank showed satisfactory business results with VND71bil of profit in May 2008 alone.
The market is still awaiting the figures of other banks. Especially, the public is focusing on ACB, a bank with impressive growth rates in recent years. It is expected that ACB will lose its number 1 position among joint stock banks.
Fulfilling yearly plan within reach
BIDV has only fulfilled 19% of its yearly plan, and it has a lot of things to do towards the year’s end. Meanwhile, other banks firmly believe that they will fulfill their yearly plans. To date, Military Bank has fulfilled 61% of its yearly plan, while Eximbank 50%. The latter hopes to get VND1,500bil in profit this year, double that of 2007.
Two listed banks, ACB and Sacombank, seem to be finding it difficult to obtain VND2,500bil and VND2,000bil, respectively, to fulfill their yearly plans. However, experts say that the profit of banks, like other industries and services, always increases considerably towards the year’s end.
Experts have every reason to believe that banks’ profit will improve towards the year’s end. According to the State Bank of Vietnam, the usable capital of the banking system is profuse, while liquidity has improved. There are signs that show that interest rates may go down after a long time of increasing. The VND/US$ exchange rate has been gradually stabilised, while the stock market and the real estate market have shown signs of recovery.
However, in fact, high profit proves to be not a top priority of many banks in the current period.
Dang Van Thanh, Chairman of Sacombank, said that in the current difficult conditions, banks will have to sacrifice some profit for a more important goal: ensuring safe operation (liquidity, risk management and credit growth).
VNN
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