Several banks to adjust profit target

Barely any commercial bank is confident of hitting the profit target. Some even are considering readjusting the goal for the year.

“Assuming more favourable economic climate, our desired pre-tax profit of 550 billion dong (an 82.11 percent year-on-year increase) would be within the reach thanks to our current chartered capital of 3 trillion dong which is going to be raised to 5 trillion dong in 2011″, said Hoang Van Toan, Chair of TrustBank in an interview with the Stock Investment. Yet, credit growth limit of below 20 percent and restriction on lending to non-production sector have prompted this bank to focus briefly on financing agriculture and rural development related activities. Thus, the outstanding loans have not seen remarkable growth whereas hardly has there been any room for credit growth.

It stands to reason that slight readjustment of the target is to be made so as to be in accordance with the market fluctuations due to the two first quarter pre-tax profits falling behind 50 percent of the target.

Similarly, another commercial joint stock bank also considers lowering the year target though the prescribed modest 600 billion dong in comparison with its total capital of more than 4 trillion dong.

However, Trinh Van Tuan, general director of OCB is persistent in meeting the target despite the past seven month pre-tax profit of 200 billion dong out of the expected 500 billion dong.

With regard to Techcombank, one of Vietnam’s largest joint stock banks, the first half of the year saw merely 1,500 billion dong in pre-tax profit against the goal of 4 trillion don, yet the profit target has not been modified. The general director, Nguyen Duc Vinh affirmed the strategy to raise the proportion of revenue from services rather than credit activities as previously. Credit granting will be restructured towards concentrating on clients with decent profiles, robust financial health.

At the recent meeting with twelve large commercial banks, the State Bank of Vietnam’s Governor Nguyen Van Binh put forward orientations on monetary policies for the four remaining months. Credit institutions signalled determination in lowering lending rates to non-production sector to 17pct-19pct p.a since mid-September this year and simultaneously keep the mobilisation rate well under 14 percent p.a.

However, bringing the actual mobilisation rate down to the cap rate of 14pct p.a would unlikely deter commercial banks from further lending rate cuts. Therefore, profit targets could hardly count on expected revenue from lending activities to be fulfilled.

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Sep 8 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry