VietNamNet Bridge – The big joint stock banks which used to make huge profits of trillions dong in previous years, witnessed a slowdown in 2010. Meanwhile, smaller banks saw a faster growth.

 
Some years ago, the club of the banks with the profits of trillions dong only included four state owned banks, plus big joint stock banks such as ACB, Techcombank and Sacombank. Vietinbank and Vietcombank are still considered state owned banks even though they have been equitised, because the State is still holding the controlling stakes.

 

In the past three years, the club welcomed the admission of Eximbank, Maritime Bank and Military Bank. In 2010, VIB Bank was also admitted to the club.

 

Banking experts say 2010 was a special year, because of the clear gap in the growth rates of the  biggest joint stock banks. The biggest among them, ACB, had the lowest profit growth rate. In 2010, its pretax profit was 3100 billion dong, increasing by just nine percent in comparison with 2009. The two other banks were Techcombank which had the pretax profit of 2750 billion dong (+ 21 percent) and Sacombank with 2831 billion dong (+ 30 percent). Military Bank had the growth rate of 30 percent and the profit of two trillion dong.

 

Meanwhile, Eximbank and Maritime Bank were listed among the banks which grew at more than 50 percent. The banks got the profit of 2378 billion dong (+55 percent) and 1518 billion dong (+ 51 percent), respectively. The new member of the club VIB saw a high profit growth rate of 72 percent, obtaining 1057 billion dong.

Explaining the slowdown, general director of a bank cited two reasons. First, as banks become bigger, it is more difficult for them to maintain high growth rates. Second, every banks has its own problems which has led to the unsatisfactory business results.

 

“Meanwhile, the operation scale of other banks, like Maritime Bank or VIB Bank, isn’t large, with the total assets of about 100 trillion dong. This, plus the reform carried out by the banks in recent years, has helped them make a great progress,” he said.

 

Maritime Bank and VIB both hired the leading international strategists to help restructure their operations. In the past few years, the consultancy experts from Boston Consulting Group and McKinsey have helped create new faces for the two banks.

 

Especially, in 2010, VIB was strengthened with the help of a foreign strategic partner – the Australian leading bank Commonwealth Bank of Australia (CBA). The bank has made a 15 percent capital contribution to VIB and sent staff to VIB’s bank of directors, bringing a improving VIB’s operations in 2010.

 

A strategist, who knows the two banks well, noted that last time, Maritime Bank has emerged as an example of comprehensive and rapid reform.

 

However, he has also warned that a too rapid reform may be risky., he thinks that VIB is following a more stable restructuring process.

 

As for Eximbank, with the participation of the foreign strategic shareholder – Japanese Sumitomo Mitsui Banking Corporation since 2008, the bank’s growth rate was not high in 2009. However, after the changes in high ranking executives, the situation has improved with the profit increasing by 55 percent and the total assets increasing by 100 percent.

 

Commenting on the trillion dong profits of the credit institutions, Chair of a fund management company noted that in fact, the profit margin of the banking sector was not big, just 15 percent, much lower than that of other business fields.

 

According to Phan Dao Vu, General Director of Bao Viet Bank, experts and businesses say that the profits of the banking sector are unreasonably high. However, Vu said, banks were the “artery” of the national economy, and it would be bad to force banks to reduce their business efficiency.

 

C. V