VietNamNet Bridge – Commercial banks have officially announced big profits for the first six months of 2011, despite the tightened monetary policies under which their credit growth rate must not be higher than 20 percent, and banks cannot push up the loans to non-production sectors.

Big guys report big profits

On July 25, all four of the biggest commercial banks which list their shares on the stock market; namely Vietcombank, Vietinbank, Eximbank and Sacombank released the finance reports for the second quarter of 2011.

Vietinbank obtained the pretax profit of 2590 billion dong in the second quarter, raising the accumulative profits in the first half of 2011 to 3619 billion dong, fulfilling 71 percent of the yearly plan.

Vietcombank has seen the profit in the second quarter slightly decreasing by 98 billion dong in comparison with the same period of 2010. However, the total profit of the bank in the first half still increased by 8.2 percent, reaching three trillion dong.

Two other banks – Eximbank and Sacombank – have also reported high profits of 1690 billion dong and 1490 billion dong, respectively.

Meanwhile, Navibank has obtained 127.56 billion dong in pretax profit in the first half of the year, while the bank plans to earn 276 billion dong in pretax profit this year. Military Bank has said it has fulfilled 50 percent of the profit plan. Earlier this year, the bank’s shareholders’ meeting decided that the bank needs to obtain the pretax profit of 2915 billion dong in 2011.

According to Nguyen Thi Ngoc Van, Deputy General Director of Dong A Bank, said that credit remains the main source of income of the bank. This is also the situation of many other banks.

General Director of a joint stock bank which had the profit of one trillion dong in the first half of the year also said, that 80 percent of the profits came from interests, of which credits brought 40 percent.

The reported high profits of banks, once more, have given another reason to businesses to believe that banks now set overly high interest rates, while in fact; they can offer loans at lower interest rates.

“Commercial banks say they cannot slash lending interest rates because they have to pay high for deposits. However, the figures about the banks’ profits can show that banks still can live well in difficulties, while enterprises are dieing,” an expert said.

Bank profits in the eyes of securities companies

“As such, though the monetary policies have been tightened, and the credit growth has been limited, many banks still can fulfill their business plan, and they still can maintain surprisingly high growth rate,” the bulletin by the Saigon-Hanoi Securities Company (SHS) reads.

“The macroeconomic difficulties and the tightening of the monetary policies have influenced businesses which borrow capital for production, while they have in no way had impacts on banks – the lenders,” the bulletin continues. “The growth of the whole economy has been slowed down which truly reflects the burdens production enterprises are bearing.”

Meanwhile, according to HCM City Securities Company (HSC), Vietinbank could obtain high profits because the bank had the advantage of having input costs at low levels when it could access cheap capital sources. The fact that Vietinbank could maintain high margins between the input costs and the lending interest rates allowed it to obtain satisfactory business result.

However, HSC believes that the income growth of the bank would slow down in the last six months of the year, due to the high income of the last six months of 2010. The securities company has also predicted that Vietinbank would have to pay higher for provisioning in the last six months of 2011.

Similar predictions have also given by HSC about Eximbank, while HSC stressed that it keeps optimistic about Eximbank’s business performance in 2011.

C. V