VN bank profits ‘impressive’

HA NOI — Several banks have posted impressive profits for last year, despite the world economic crisis.

Maritime Bank had a pre-tax profit of VND1.08 trillion (US$58.59 million) as at December 31, up 32 per cent on the previous year. Young joint stock bank Tien Phong Bank netted VND164.7 billion (8.9 million) profit after setting a risk provision fund, of 10.5 per cent.

Vietinbank profited by more than VND3 trillion ($163 million), 16 per cent higher than targeted.

In the first 11 months, Vietcombank posted a pre-tax profit of VND4.4 trillion ($237.8 million), 29.4 per cent higher than targeted for the year, and forecast net VND4.8 trillion ($259.45 million) by year end.

"Earnings from lending have accounted for 60 per cent of the bank’s total revenue," Vietcombank general director Nguyen Phuoc Thanh said.

Non-credit services

Sacombank posted VND1.9 trillion ($102.75 million) pre-tax profit, up 19 per cent on projections. Earnings from credit business accounted for 25.5 per cent.

Viet Nam Banks Association General Secretary Duong Thu Huong said earnings structures at banks were changing; some gaining nearly 50 per cent of earnings from non-credit services.

"That trend is proper for banks. They should diversify incomes, and not rely only on traditional credit business," Huong said.

Some bankers were optimistic about prospects this year and had set higher profit targets.

Sacombank targeted VND2.6 trillion ($140.54 million) in pre-tax profit this year, up by 63 per cent against last year.

"We are aware of the challenges but we will aim for a profit of VND4 trillion ($133.33 million)," Vietinbank general director Pham Xuan Lap said.

Viet A Bank also planned to expand its network, increasing transaction offices and branches to 100 from 60 nationwide by the end of this year.

Some banks worry that policies to control inflation could impact banking businesses.

The State Bank of Viet Nam plans to keep credit growth at 25 per cent, much lower than the 37.73 per cent last year.

Tien Phong Bank deputy general director Phan Thanh Son assumed: "This year, banks which balance earnings from services and credit business will be good. But it is not easy for banks who profit mainly from traditional products."

Bank warning

Some bankers warn that banks should allocate more capital to a risk provision fund according to international standards because Viet Nam is aligning more closely with the global community.

"Liquidity may be the greatest concern," Viet A Bank general director Nguyen Duy Hung said.

"It’s not a problem for giant banks like Vietcombank, BIDV, Vietinbank and the ACB which hold large amounts of Government bonds and financial tools. However, not all banks are like that."

The central bank last week injected VND15 trillion ($810.81 million) through open market operations to improve liquidity in the system and cut borrowing costs on the interbank market.

At the same time, the closure of gold trading floors and accounts would also trim the profits of several banks. — VNS