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Difficulties force banks to adjust profit targets
Big difficulties of the national economy and the tightened monetary policies have forced commercial banks to adjust their profit targets.
Many shareholders still don’t know how much profit banks earned in the first three quarters of the year. It seems that banks are trying to keep this secret. Only several banks have publicly announced their business results. It is because, according to experts, the business performances of the banks were not as good as previously expected.
Credit always makes up the highest profit of banks, while loaning activities have been facing big difficulties. Banks cannot expand loaning because the credit growth rate must not be higher than 30%. Meanwhile, overly high interest rates have been keeping clients away from bank loans.
East Asia Bank (EAB) said it reaped VND440bil in pre-tax profit in the first eight months, while the banking group plans to reap VND740bil in 2008. Nguyen Thi Ngoc Van, Deputy General Director of EAB, said that the targeted VND740bil is achievable, because VND440bil is the profit from banking activities, while VND740bil is the profit set for the bank and its subsidiaries as well.
Van said that the profit from the gap between the capital mobilisation interest rates and lending interest rates was not considerable, while the earnings mainly came from finance and banking services.
She said that services (overseas remittance and international payment) brought 60% of total profit to EAB in the first eight months of the year.
Eximbank is considered a ‘special case’ in the banking system as it had a high profit growth rate. By August 31, the total pre-tax profit of Eximbank had reached VND982bil, an increase of 157% over the same period of 2007, while the total assets of the bank had reached VND48,130bil, an increase of 82%.
Bankers guess that Eximbank was able to earn such high profit because it had a big surplus from the sales of stakes to strategic partners last year.
The big difficulties of the banking system have prompted Sacombank’s directorial board to seek permission from shareholders to adjust its business target from VND2tril to VND1,500bil. The bank got VND940bil in pre-tax profit in the first eight months of the year.
Some other banks have also adjusted targeted profit levels. VP Bank, for example, has lowered its goal from VND500bil to VND300bil. Though difficulties have been eased, bankers are still finding it difficult to obtain the profit goals they set earlier this year.
VNN
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