Banks expect profit rise in second half

Commercial banks said they expect profit rise in the second half this year as inflation is controlled, interest rates decline and creating favourable conditions for credit growth.

Compared to last year, profit targets set by banks for this year are modest, especially small and medium sized banks.

GiaDinh Bank set to achieve profit of 380 billion dong in 2011, Ficombank 381 billion dong, OCB 400 billion dong, TinNghia Bank 550 billion dong, Southern Bank 600 billion dong and others.

At recent annual shareholders’ meetings, leaders of most banks said that inflationary pressures have pushed up interest rates higher in recent years, leading to input cost increases of banks, while capital output is difficult to develop.

On the other hand, Vietnam’s tight monetary policy to control the outstanding credit growth at below 20 percent and gradually tightening credit to non-manufacturing sector has narrowed pre-tax profits earned by small and medium sized banks in the first quarter.

Large banks, have an advantage of personal financial services growth, acknowledged that they found it rather hard to achieve profit targets set for 2011.

EAB set profit target of 1.3 trillion dong for this year, but the profit target passed in its annual shareholders meeting has been reduced to 1.185 trillion dong.

However, Tran Phuong Binh, general director of EAB said that the planned 1.3 trillion dong profit can still be done, if in the second half of this year, interest rates decline and inflation is under control to facilitate for credit growth.

Agreed with Binh’s point of view, Dang Van Thanh, Chair of Sacombank also stated: “Interest rates will gradually decrease from the second quarter or early third quarter, the outstanding credit growth in the two last quarters will be improved”.

While big banks expect interest rates to fall in the second half of 2011, providing an opportunity to improve credit growth, smaller banks would propose to the State Bank of Vietnam to reconsider remove the limit on outstanding loans to increase revenues, help to complete given profit target.

Nguyen Van Dung, deputy director of the SBV – HCM City Branch emphasized, in the context of the market in 2011 with certain difficulties, tightening monetary policy, including credit growth control at below 20 percent and narrowing lending in non-manufacturing sector is needed, so commercial banks must calculate to make a reasonable profit target. – Dautu

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial