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Vietnam Banking News

Vietnam Business » Vietnam Banking News » Bank Profits Fail To Inspire in Jan-Apr

Bank Profits Fail To Inspire in Jan-Apr

In the first four months, HDBank gained VND80 billion in pretax profits. The figure is encouraging if measured against the year business plan of VND300 billion. However, the bank admitted that the full year plan will be very difficult to fulfill, especially when lending interest rates are sliding.

Lien Viet Bank only obtained a modest VND202 billion in the first four months, but the bank planned for VND900 billion in profit in 2010.

OCB Bank received VND112 billion in pretax profits in the first quarter, a figure that is not low if compared with their 2010 business plan aiming at VND400 billion. Yet it remains modest compared with the banks chartered capital of VND2 trillion, which will increase to VND3 trillion by the end of 2010.

Dang Van Thanh, Chair of Sacombank, confirmed that the bank made a profit of VND700 billion and hopes to achieve VND2,400 billion this year. By March 31, 2010, income from credit accounted for 26.48%.

Western Bank profit;s in the first four months was VND20.4 billion, just 1/10 of their target profit of VND240 billion for the year.

According to the banks, business conditions in the first quarter were not favorable, so profits landed far below expectations. The banks hope that operations will improve in the coming months, even though it will be very difficult to improve. Banks have been asked to lower lending interest rates, while they must still mobilize capital at high interest rates.

Depositors only bring money to banks when they can enjoy satisfactory real positive interest rates that are higher than the consumer price index (CPI). Meanwhile, businesses want to borrow money at low interest rates, so banks cannot seek reasonable profits when the interest rate margin has narrowed.

Currently, deposit interest rates are hovering around 11.5% per annum, while banks are lending at 12.5-13% for short-term loans and 14-14.5% per year. Businesses still say the interest rates are too high and hesitate to access bank loans.

Vietcombank, for example, had VND2 trillion in pretax profits in the first quarter of 2010, but it only dared to set a goal of VND4,500 billion for the whole year, even lower than the actual profit of VND5 trillion in 2009. Explaining the modest target, Vietcombank officials explained that they foresee that revenue from lending will decrease by VND1 trillion in comparison with 2009.

Financial analysts claim that the modest profits in the first four months of 2010 may be why many banks dawdle in declaring their business results.

Vietnam Business And Financial News Network. Source [stox.vn]

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