Although banks have achieved more than half
of their pre-tax profit target set for 2010, however many banks are now
much worried about slow credit growth, which may affect their profits.
Chair of the Foreign Trade Bank of Vietnam (Vietcombank - VCB), Nguyen
Hoa Binh, said that at the end of August 2010, Vietcombank earned a
pre-tax profit of 3 trillion dong, after setting up a prevention of
risks. Its pre-tax profit target for this year was set at 4.5 trillion
dong, according to Binh, the bank is likely to achieve this goal. But if
compared with the pre-tax profit levels achieved last year at
approximately 5 trillion dong, then its profit plans for this year was
rather modest.
Binh said that, with the marketplace today, especially when the interest
rate difference of input and output is relatively small, the pressure
on banks to complete the profit target set is quite heavier. On the
other hand, the growth of outstanding loans is not easy to be
drastically improved, and banks must be concerned with more quality to
ensure safety, so they cannot massively develop loans. Indeed, in recent
years, banks have sought to diversify revenue sources, but the ratio of
contribution to profits is mainly from credits. With Vietcombank,
income from lending operations account for about 60 percent of total
revenues contributed to its profits.
Meanwhile, the foreign exchange trading segment in 2010 is a hard part, because the ask and bid rates are relatively close.
Besides, gold trading activities are limited. For revenues from payment
services, although Vietnam's exports have showed signs of improvement,
according to the evaluation of some commercial banks, the improvement of
exports was not very significant. Therefore, banks said that revenues
from export service activities are difficult now to expect a good growth
from now to the end of this year.
Many leading banks said, revenue from credit operations in the period
from now to the end of this year can not increase respectively, because
the growth rate of outstanding credits will not see many positive
changes.
At Vietcombank, Binh said, the goal of his bank's credit growth in 2010
is to increase only about 23-26 percent over the previous year, but
Vietcombank must also base on the market performance to attempt to
achieve this target. Up to now, the outstanding credit growth of
Vietcombank is about 20 percent, and is not likely to rise from now to
the end of this year.
In Asia Commercial Bank (ACB), Ly Xuan Hai, general director of ACB,
said that as of August 31, pre-tax profit of ACB was 1.814 trillion dong
after setting a credit risk provisioning; its oustanding loans were
79.5 trillion dong, and NPL ratio was below 0.4 percent and this bank
reched more than 280 branches and transaction offices over the country.
In the first eight months of 2010, ACB's credit growth reached 30
percent and is expected to achieve 50 percent later on this year.
According to Hai, the bank is likely to gain 20 percent credit growth in
the last four months. So, with the targeted 2010 before tax profit of
3.6 trillion dong, ACB is confident enough to reach its profit target.
Income from credit operations contributed total revenues of ACB in 2010
would be about 25 percent.
Also, in the first eight months of the year, pre-tax profit of Saigon
Thuong Tin Commercial Joint Stock Bank (Sacombank) was 1.533 trillion
dong, fulfilling 63.9 percent of its profit plan for 2010 (after
deduction of a credit risk reserve). Its first six month pre-tax profit
in its audited consolidated financial statements for the quarter II/2010
was 1.501 trillion dong.
In Vietnam Technological and Commercial Bank (Techcombank), Nguyen Duc
Vinh, general director of Techcombank said, compared with the pre-tax
profit target of Techcombank set for this year (adjusted from 3.207
trillion to 2.8 trillion dong), it is possible that Techcombank will
exceed the planned target this year.
According to initial plans, 2010
before tax profit targets of Techcombank was at 3.467 trillion dong, of
which pre-tax profits of the parent bank was expected to reach 3.207
trillion dong. According to Vinh, Techcombank has adjusted profit
targets in June to better suit the market place.
In the first 8 months in 2010, HDBank reached 201 billion dong of before
tax profit, currently completing 67 percent of its yearly plan.
OceanBank it reached 374.7 billion dong of pre-tax profit in first 7
months compared with the target that the bank set for this year at 520
billion dong.
In fact, if basing on the seasonal business of banks, as well as capital
needs of enterprises, the last quarter of the year is considered the
most exciting in the years. Therefore, banks are expected to gain high
profits in the fourth quarter every year. However, predictions are made
from economic experts that the market performance from now to the end of
this year is more difficult than the previous year. The growth rate of
outstanding loans will not result in expected revenues from credit
operations - the largest capital contribution to the total profit of
banks, will decline.
According to Ho Huu Hanh, director of State Bank – HCM City branch, this
year, banks must consider the credit growth target to match the target
to control the overall growth of the sector at around 25 percent. Thus,
the possibility to achieve profit targets as banks expected is not easy.
Thus, banks are also cautious and considering when making a profit
target. However, due to the chartered capital increase of banks,
especially for small and medium scaled banks who are rushing to issue
shares to increase the capital to meet the request of the government
Decree 141/2006/ND-CP, so the pressure on profit and dividend will get
tougher.