Listed firms hesitant on profit plans, banks target higher earnings in 2011

While businesses listed stock exchanges all set lower profit plans in 2011 compared to 2010 due to fears of high lending interest rates, high inflation, banks continue to set goals to earn superior profits against 2010.

Of the 15 banks that have announced profit plans to submit to their upcoming shareholders’ meeting, CTG and VCB plans to earn profit of over 5 trillion dong, Techcombank with profit plans of 4 trillion dong, up 46 percent compared to 2010. Smaller banks also plan to increase profit in 2011, such as NamABank (157 percent), TrustBank (up 98 percent) and SCB VietABank (70 percent), Navibank (32 percent) and others.

As for growth of total assets, most banks have set high asset growth targets in 2011. Vietinbank has targeted to achieve total assets reaching more than 440 trillion dong in 2011; EIB and Techcombank set to gain total assets of 180 trillion dong, growing by 37 percent and 21 percent against 2010; Maritime Bank, MB and STB strived to reach total assets of 150 – 160 trillion dong.

Meanwhile, under Directive of State bank of Vietnam and Decree 11 of the government, commercial banks have to adjust the rate of credit growth to ensure a credit growth at below 20 percent of the entire banking system, so most banks have planned their credit growth at under 20 percent, although in 2010, banks had large credit growth, such as MB (68 percent), EIB (61 percent), VCB (25 percent), Tehcombank (26 percent), CTG (38 percent) and others.

Moreover, banks must reduce the proportion of outstanding loans to non-production to 22 percent of total loans as of June 30, 2011 and to 16 percent of total loans to December 31, 2011, if they do not want SBV to apply the doubled reserve requirement ratio twice compared with the regular and limited scope of business activities in the last 06 months in 2011 and 2012.

Under the capital increase plan, most banks have put a strong plan to increase capital in 2011, small banks need to ensure the chartered capital of 3 trillion dong according to the government’s Decree 141, while larger banks continue to increase the capital to ensure the coefficient on the capital adequacy ratio (CAR) of 9 percent. STB plans to increase capital by 17 percent to 10.740 trillion dong, EIB raises the capital by 17 percent to 12.355 trillion dong; Maritime Bank plans to raise capital from 5 trillion dong to 8 trillion dong; Vietinbank is about to raise the capital by 32-65 percent to 20 trillion dong to 25 trillion dong

There, if all banks have successfully implemented plans to increase their capital, in 2011, the market will be “flooded” with bank stocks. – Vietbiz24

Tags: vietnam stock, Vietnam stock market, VNindex