Most banks' pre-profit could be higher then full year's plan

VNStockNews.com - Banks reported that their receivable profits of 2009 will be higher than the plan. However, under the credit tightening up policies of State Bank of Vietnam (SBV), banks are facing many problems leading to the reduction in profits.

In the first ten months, Techcombank earned over 1.845 trillion dong of pre-tax profit. The bank expects to gain 200 billion dong a month in the rest of this year and finish the full year's target of 2.2 trillion dong.

During the same period, LienVietBank's pre-tax profit also was posted at 478.6 billion dong or 103 percent of 2009 plan, Maritime Bank with 780 billion dong and Military Bank with one trillion dong.

Vietcombank plans to reach four trillion dong in this year's profit instead of initially expected 3.4 trillion dong because in Jan-Oct, 3.4 trillion dong was achieved already. At Asia Commercial Bank (ACB), the huge profit of 2.7 trillion dong in 2009 can be reached, an official confirmed.

It is said that finishing the 2009 profit target is not too difficult for banks. Even, the number of banks with a profit exceeding the full year's plan is increasing. But the market is putting heavy pressure on banks when the gold price reached new high and the free market's forex rate was maintained at higher 19,000 dong per US dollar.

Currently, the capital mobilisation of banks has started to slow down while the deposit rates are going up (because basic rates increased). Although the ceiling lending rate was raised, banks' profit from credit prevision (lending) still declined sharply because the lending growth surpassed the threshold of 30 percent.

General director of Techcombank, Nguyen Duc Vinh said that the earnings from service provision accounted for a high ratio in Techcombank's 10-month huge profit.

Talking with Dau Tu Chung Khoan, Nguyen Dinh Tung-deputy general director of Maritime Bank said that the law for developing markets is that the profit from credit operations will gradually decrease. Previously, banks' profit mainly relied on the difference between deposit and lending rates. Earnings from lending accounted for up to 90 percent of total profit of banks. In the past, SBV had ruled that banks are allowed to enjoy the difference at the maximum of 4.2 percent pa. But in the current context, banks only are expected to earn a difference of 1-1.5 percent pa, Tung added.

Factually, banks are applying the average deposit rate of over 9.8 percent pa that will be raised to 10.5 percent pa in this December. Compared with the ceiling lending rate of 12 percent pa, the interest rate difference banks could gain will be 1.5 percent pa. As for small and medium sized banks, the difference is only 1 percent pa.

According to specialists, banks need to diversify service products instead of concentrating on traditional operations like lending because the interest rate difference will be narrowed gradually. If only relying on lending activity, the profit will decline in the next time. Impressive profit growth will be reported by the banks with good development strategies.

Especially, in 2010, the banking competition is predicted to be tense when the crisis is over, world's big finance groups will be recovered again and plan to expand overseas investment. So banks should focus on developing well services to raise full year's profit, but which is not easy for small sized banks.