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Margins fall for banks
Revenue from various banking services has dropped dramatically for many commercial banks in recent months. The Asian Commercial Joint Stock Bank (ACB) is one of the banks coping with the largest decrease in profits from its services. Its figures for the first nine months of the year recorded a year-on-year decrease of 39 per cent to reach VND389.2 billion.
The drop is attributed to the central bank's decision to stop gold trading via accounts.
In the past, an ACB representative said, gold trading via accounts made a significant contribution to the bank's profit earnings.
In the first nine months of 2009, for instance, out of its profit of VND1.2 trillion, VND554 billion came from gold trading activities.
A similar situation was also seen at the Sai Gon Thuong Tin Joint Stock Commercial Bank. In the first quarter of this year, the bank earned profits of just VND127.72 billion from its services, down 31.7 per cent over the corresponding period last year.
For the Commercial Joint Stock Bank for Foreign Trade (Vietcombank), profits from services in the third quarter of the year also dropped to VND186.27 billion, compared with VND218.12 billion recorded for the same period last year.
The bank's most affected business area was international payments and card accounts. It attributed the fall in profits for these services to fierce competition.
Independent analysts said that this drop in profits was unavoidable, since most banks only paid attention to diversifying their revenue sources, not attaching enough importance to adding value for their products and services.
Since last year, Vietcombank as well as many other commercial banks have not yet made due investment into products that could help them increase their revenue, according to Le Xuan Nghia, vice chairman of the National Financial Supervisory Committee.
Many small banks had no plans to develop products and services. They only expect to make profits from difference in interest rates, Nghia added.
To ensure a stable profit source, banks should seek ways to fully exploit their earning potential from products and services, experts said.
This measure has proved its effectiveness at some banks that have for many years actively added value to their services and developed new products.
These include the An Binh Commercial Joint Stock Banks (ABBANK) and the Military Commercial Joint Stock Bank (MB), both of which have almost achieved their annual profit targets.
MB has created specific products for customers and come up with plans to strengthen development of internet banking services, and set up cooperative relationships with partners to facilitate payment activities.
ABBANK has focused on diversifying payment channels at its transaction offices.
ABBANK general director Nguyen Hung Manh said profits earned from services in the last nine months was up 83 per cent compared with the same period last year, accounting for 19 per cent of its total profits for the period.
Falling local currency hits car imports
The fall of the local currency against the US dollar and volatile gold prices have reduced demand for imported cars.
The rise of the dollar against the dong has made imported cars more expensive while the spike in gold prices has impacted the dollar/dong exchange rate as gold smugglers seek the greenback to buy the precious metal.
According to traders, the market has remained dormant for some time now. They said it was more costly to import cars as commercial banks do not sell dollars at publicly quoted prices and levy extra fees on dollar buyers. To avoid losses, sellers of imported cars have had no choice but to raise prices.
Some dealers in local cars have also increased prices in response to the exchange rate fluctuations.
Experts said prices of locally assembled automobiles would eventually surge since local automakers import parts needed for assembly.
The General Statistics Office has estimated October car imports volume as unchanged from the previous month at 5,000 units, but the value dipped to US$76 million. The August import volume was also 5,000 units but they were worth $95 million, up from $92 million a month earlier.
Thien Ly
vietnamnews
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