Banks trim yearly growth targets

Most of the top 10 large and mid-sized joint stock commercial banks in Vietnam have followed the lead of their small-scale peers in downsizing growth targets this year, with year-on-year pre-tax profit growth rates expected to be equal to a third or even half 2010’s figures. 

But ACB and Techcombank, Vietnam’s fourth and eighth largest joint stock  banks in term of charter capital respectively, both of which missed their planned targets last year, are hoping to bounce back strongly in 2011.

ACB is keen to show that it will become a leader among joint stock banks by setting a pre-tax profit of VND4.1 trillion ($198 million) this year. This would mean a year-on-year growth rate of 32 per cent, which is nearly quadruple last year’s rate. It is in contrast that ACB pre-tax profit in 2010 was only 86 per cent of its planned target for last year due to profit reduction in its affiliate’s gold and securities businesses.

Meanwhile, Techcombank remains bullish too, projecting a similar pre-tax profit of VND4 trillion ($193 million) with a year-on-year growth rate of 46 per cent. Last year, the bank scaled back its target figure by 12 per cent but nearly managed to meet its  original profit target.

By comparison, Vietcombank, the country’s largest joint stock bank in term of charter capital, has set a pre-tax profit target of VND5.6 trillion ($272.9 million) making it number one volume-wise among joint stock banks. However, the year-on-year growth rate is expected to be a third of that seen by the bank in 2010. 

The second largest joint stock bank, Vietinbank’s targeted pre-tax profit for this year is only slightly lower at VND5.1 trillion ($246.3 million). But, the bank predicts a year-on-year growth rate of just 11 per cent, equal to a third of last year’s rate.

Other banks including Eximbank, Sacombank, Military Bank and Maritime Bank have set their pre-tax profit targets at equal to or less than VND3 trillion ($144.9 million) this year.

However, neither ACB nor Techcombank’s management boards gave details on  breakthrough measures to achieve the target in the context of the government’s cap on credit growth rate in the banking system and tightened foreign exchange and gold transactions policies.

ACB chairman Tran Xuan Gia announced both details of the bank’s 2010 performance and targets for this year at the recent annual general shareholder meeting. He said the bank would accept a maximum rate of non-performing loans of 1.2 per cent in 2011, quadrupling the rate of last year.

Techcombank, meanwhile, may consider listing this year on either local or foreign bourse.

Tran Hoang Ngan, a member of the National  Advisory Council for Financial and Monetary Policies, said 2011’s market vulnerabilities and the government’s on-going credit tightening policies were presenting great challenges to businesses from assorted economic sectors, and not just to banks.

“However, banks with good corporate governance skills and competitiveness in offering financial services and with banking service will achieve better results,” said Ngan.