LookAtVietnam – The profit obtained by commercial banks in the first four months of 2010 remains modest compared to ambitious year business plans.

VietNamNet Bridge – The profit obtained by commercial banks in the first four months of 2010 remains modest compared to ambitious year business plans.

Banks’ big profits please banks but grieve businesses

Businesses facing big difficulties, banks earning fat profit?

Foreign banks reap fat profits in 2009

Depositors only bring money to banks when they can enjoy satisfactory real positive interest rates

In the first four months, HDBank gained 80 billion dong in pretax profits. The figure is encouraging if measured against the year business plan of 300 billion dong. However, the bank admitted that the full year plan will be very difficult to fulfill, especially when lending interest rates are sliding.

Lien Viet Bank only obtained a modest 202 billion dong in the first four months, but the bank planned for 900 billion dong in profit in 2010.

OCB Bank received 112 billion dong in pretax profits in the first quarter, a figure that is not low if compared with their 2010 business plan aiming at 400 billion dong. Yet it remains modest compared with the bank’s chartered capital of 2 trillion dong, which will increase to 3 trillion dong by the end of 2010.

Dang Van Thanh, Chair of Sacombank, confirmed that the bank made a profit of 700 billion dong and hopes to achieve 2400 billion dong this year. By March 31, 2010, income from credit accounted for 26.48 percent.

Western Bank profit;s in the first four months was 20.4 billion dong, just 1/10 of their target profit of 240 billion dong for the year.

According to the banks, business conditions in the first quarter were not favorable, so profits landed far below expectations. The banks hope that operations will improve in the coming months, even though it will be very difficult to improve. Banks have been asked to lower lending interest rates, while they must still mobilize capital at high interest rates.

Depositors only bring money to banks when they can enjoy satisfactory real positive interest rates that are higher than the consumer price index (CPI). Meanwhile, businesses want to borrow money at low interest rates, so banks cannot seek reasonable profits when the interest rate margin has narrowed.

Currently, deposit interest rates are hovering around 11.5 percent per annum, while banks are lending at 12.5-13 percent for short-term loans and 14-14.5 percent per year. Businesses still say the interest rates are too high and hesitate to access bank loans.

Vietcombank, for example, had 2 trillion dong in pretax profits in the first quarter of 2010, but it only dared to set a goal of 4500 billion dong for the whole year, even lower than the actual profit of 5 trillion dong in 2009. Explaining the modest target, Vietcombank officials explained that they foresee that revenue from lending will decrease by 1 trillion dong in comparison with 2009.

Financial analysts claim that the modest profits in the first four months of 2010 may be why many banks dawdle in declaring their business results.

Source: Dau tu chung khoan