Banks set realistic targets for 2011

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Chairman of Ocean Commercial Joint Stock Bank (OceanBank), Ha Van Tham has announced his bank plans to raise its chartered capital to VND5 trillion ($250 million) and set 2011 pre-tax profit rate at VND1 trillion ($50 million) against 2010’s VND700 billion.

At the same time, OceanBank expects to offer shareholders 16-17 per cent dividend rate for this year against 18-19 per cent in 2010.

Similarly, the HDBank intended to raise its chartered capital to VND4 trillion ($200 million) in 2011. Earlier, the bank scaled up its chartered capital to VND3 trillion in late 2010. In 2010, HDBank raked in over VND351 billion ($17.5 million) in pre-tax profits, far beyond projected VND300 billion.

Smaller commercial joint stock banks, which hiked their chartered capital from around VND1 trillion ($50 million) to $3 trillion in late 2010, such as DaiA Bank, VietBank and Mekong Bank, also took a cautious approach towards 2011 profit targets.

DaiA Bank set a profit target of VND106 billion over its total chartered capital of VND1 trillion in 2010. The bank, however, tripled its chartered capital to VND3.1 trillion later last year. Bank’s deputy chairman Le Huu Tinh said DaiA Bank would carefully consider profit targets for 2011 to meet the recent hike in the chartered capital.

Big names in the banking sector are also in the same position. For example, the Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) set a profit target for 2011 at VND2.8 billion ($140 million) against 2010’s $130 million.

Financial analysts assume that 2011’s development perspective would be brighter than in 2010. However, the banking sector will continue facing difficulties as the business community would not resume growth quickly in the post-crisis period.

Supportive of the argument, deputy rector of Ho Chi Minh City University of Economics Dr. Tran Hoang Ngan said, “Further credit tightening would be most likely in at least the first half of 2011 given the state’s commitment to keeping credit growth of 23 per cent in 2011 to bridle inflation.”