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Banks set low business targets to ease pressure
Shareholders of Eximbank said at the bank’s shareholders’ meeting on April 17 that the business goal the bank’s leadership set for 2009 proved to be very low. The same complaint was also heard at ACB’s shareholders’ meeting on April 18.
Eximbank’s board of management submitted to the shareholders’ meeting a plan to obtain the pre-tax profit goal of VND1,500bil in 2009 (the figure was VND969bil in 2008). The bank’s chartered capital is expected to increase from VND7,220bil to VND8,800bil in 2009, while the total assets are expected to reach VND63,300bil, up by 31% over last year.
The bank has also set other goals for 2009: total capital to be mobilised to reach VND45,300bil, up by 40%, while total outstanding loans VND34tril, up by 60%.
Asia Commercial Bank (ACB), which is now holding 22% of Eximbank’s stakes and plans to raise the rate to 30-35%, said that the business plan of Eximbank was ‘modest’, and that the low goals were not suitable for the bank, one of the top five joint-stock banks in Vietnam.
According to Pham Trung Cang, Deputy Chairman of ACB, the VND969bil of pretax profit Eximbank obtained in 2008 also did not fit Eximbank’s capability. Eximbank has the high chartered capital and surplus fund worth VND13tril.
“With that sum of money, Eximbank would get VND1,200bil in profit if it just deposited the money at the average interest rate of 10-12% per annum,” Cang said.
Nguyen Thanh Long, Chairman of Eximbank’s Board of Directors, admitted to big mistakes in the management of the bank. The problems in the non-performing loan risk management of the bank made the non-performing loans increase (in 2008, Eximbank’s non-performing loans were VND1tril, or 4.71% of total outstanding loans).
Regarding the business goals set for 2009, he said that the board of directors had thoroughly considered before making decisions. The VND1,500bil profit proves to be a reasonable profit level for this year, especially as banks have been warned about additional difficulties.
Eximbank said that it should not set the high target of VND2tril in profit as suggested by the big shareholder ACB.
ACB, while criticising Eximbank for setting low business targets, faced the same criticism itself at its shareholders’ meeting on April 18. ACB plans to get the profit of VND2,700bil this year, or just VND144bil more than 2008. Meanwhile, ACB’s shareholders want the profit target as high as VND3tril-3,500bil.
Tran Xuan Gia, Chairman of the Board of Directors of ACB, said that the business target was set after considering that difficulties will still exist in 2009.
It is expected that in May, the National Assembly will have a meeting to consider the lowering of the GDP growth rate target from 6.5% to 5%. Gia said that the bank’s profit target should also be based on the national economy's performance.
Not only Eximbank and ACB, many other banks have also set ‘modest’ profit plans for this year. The director of a bank said that he prefers low targets in order to ease the pressure on the board of management.
VietNamNet, DTCK
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