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Banks’ profit in 2010 – the picture still unclear
The end of year is approaching, but some banks will only be able to tell whether they fulfilled their yearly business plans on the last days of 2010.
An Binh Bank (ABBank) provides updates on its businesses results every month. The reason for this regularity seems to be the bank’s overall smooth operation.
In the first nine months of the year, ABBank had 546.2 billion dong in pretax profit. Earlier this year, the board of management set a modest target of $580 billion dong in pretax profit. However, this was later raised to 630 billion dong. But already by the end of September 2010, the bank had fulfilled 86.7 percent of the yearly plan, an increase of 94.1 percent in comparison with the same period last year.
Another bank which also gives regular updates on its business results is Ocean Bank. The bank announced in its press release on October 15 that it has obtained 530 billion dong in pretax profit in the first nine months of the year, which is higher than the target profit for the whole year 2010, set at 520 billion dong.
Military Bank, though not having updated the information about the business results for September, but has announced that it has fulfilled 77 percent of the pretax profit plan (1700 billion dong) after the first seven months of the year.
Meanwhile, it seems that many other banks still have a long way to go before fulfilling their plans. The finance report released by Navibank shows that the bank’s post tax profit in the third quarter of the year increased sharply by 175 percent in comparison with the same period in 2009, reaching 58.2 billion dong. However, the accumulative profit in the first nine months of the year was only 113.54 billion dong, meaning the bank has only fulfilled 43.16 percent of the yearly plan (263.039 billion dong)
At the end of last week, Asia Commercial Bank (ACB) released its finance report for the third quarter of the year, which showed that the income from many main businesses in the third quarter and the first nine months of the year was lower than that of the same period of 2009, thus leading to the slight decrease in the post tax profit.
The report showed that the total pretax profit of ACB in the first nine months of the year was 2,000.684 billion dong, fulfilling only 55.5 percent of the yearly plan (3600 billion dong). Therefore, the bank has only three months left to fulfill the other 44.5 percent of the plan.
Similarly, DongA Bank still has a lot to do to fulfill the business plan set for 2010. Earlier this month the bank announced that the 9-month pretax profit of the bank, not including subsidiaries, was 515.36 billion dong, fulfilling 46.85 percent of the yearly plan
In 2009, both ACB and DongA bank were only able to tell they fulfill the yearly plan in the last minute.
2010 is a year with many difficulties
ACB earlier this year anticipated that 2010 would be a difficult year for the bank’s operation. Some of its businesses have been scaled down and the capability to expand operation network has been limited, while risks have increased (Liquidity, exchange rate, legal framework).
Earlier this year, banks decided that they need to expand credit in order to increase the profit from credit. However, as the margin interest rates are limited, and banks meet difficulties trying to expand credit, it is understandable why the profit is not high.
Regarding the risks related to the legal framework, analysts believe that banks have to struggle hard to satisfy the regulations stipulated in Circular 13 on capital adequacy ratio which is believed to make the capital costs higher.
vietnamnews, vneconomy
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