Banks prefer to look ahead not behind

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Healthy pre-tax profits of large-scale joint stock commercial banks in 2011 are sound despite assumed difficulties caused by the credit growth cap of less than 20 per cent and non-manufacturing credit growth limit of 16 per cent.

Vietcombank reported a VND3 trillion ($144.9 million) pre-tax profit, meeting 53 per cent of its full year target in 2011.

Vietcombank chairman Nguyen Hoa Binh said the macroeconomic situation this year made it difficult for bankers to predict whether interest rates would drop.

Sacombank reportedly gained a pre-tax profit VND1.5 trillion ($73.1 million) in the first half of this year, meeting 56 per cent of its full-year target. Profits from credit operations accounted for 40 per cent of the bank’s earnings.

“The bank could reach its target or exceed its target this year as the second half will bring more profits to the bank,” said Tran Xuan Huy, general director of Sacombank.

Dong A Bank bank earned a VND675 billion ($32.6 million) pre-tax profit, while ABBank’s was VND307.6 ($14.7 million) , meeting 46.3 per cent of its full-year target.

“Interest rates will move toward creating positive impacts as inflation rate is going down, therefore, credit operations may be boosted in the second half as credit growth rate of most banks is still low,” said Tran Phuong Binh, DongA Bank general director.

However, small-scale banks did not have such good results.

OCB’s pre-tax profit was VND115 billion ($5.5 million) at the end of May, meeting only 23 per cent of its full-year target due to slow year-on-year credit growth of 5 per cent.

According to the State Bank, 23 out of the total 37 local commercial banks have a 22-50 per cent non-manufacturing sector credit ratio, while 18 banks’ ratios were 31-37 per cent and one bank had hit 50 per cent by mid June this year.

The ratio of credit for non-manufacturing sectors out of the total credit in Vietnam slightly decreased to 16.92 per cent to from 18.87 per cent by the end of May. Some banks also posted growth of 154 per cent and 114 per cent credit on securities against the beginning of this year.