Falling bank profits are said to be a sign of continuing economic difficulties. — Photo laisuatnganhang.vn

HA NOI (Biz Hub) ― The domestic banking sector's total profits topped VND20 trillion (US$952.4 million) during the first half of this year, higher than the same period last year, Dau tu Chung khoan (Securities Investment) news reported, citing a State Bank source.

Several banks have posted significant profit increases during the six months, such as Vietinbank with an after-tax profit of nearly VND3.2 trillion ($152.4 million), a year-on-year rise of 50 per cent, and BIDV with an after-tax profit of over VND2 trillion ($95.2 million), an increase of 43 per cent over the same period last year.

TienPhong Bank chairman Do Minh Phu said that following the bank's restructuring process, pre-tax profits rose by 48 per cent year-on-year to reach VND172 billion ($8.2 million) in the first half.

The State Bank source said that 81 out of 124 credit institutions, which had posted six-month business results, suffered losses or saw profits shrink.

Vietcombank earned VND2.7 trillion ($128.6 milllion) in pre-tax profits during the period, down 6 per cent year-on-year and representing 47 per cent of its profit target for 2013.

Navibank saw after-tax profits decline by 88.5 per cent year-on-year to VND10.5 billion ($500,000), after witnessing a loss of VND11.3 billion ($538,000) in the second quarter.

Dau tu Chung khoan said that many other credit institutions hadn't announced business results, but its inquiries had found that many banks had fulfilled only 20-30 per cent of their annual profit quotas during the first half.

It quoted an unnamed joint-stock bank chairman as saying the profit figures still painted a bright picture for the banking sector.

"In the face of stagnant economic conditions, banks are finding it extremely hard to cut costs. It will be normal to see more banks posting losses by the end of the year," he said.

Banking expert Nguyen Tri Hieu said that the overall profit picture might be dimmer if more accurate data on bad debts was available.

"Even independent international auditing companies in Viet Nam haven't been able to assess the bad debt situation correctly, so even when banks have posted positive profits, we still don't know how exact the figures are," he said.

Hieu noted that different debt assessing standards between local and international auditors remained an obstacle in ensuring accurate figures on bad debt.

Economist Vu Dinh Anh said that as banks are an intermediary in the economy, their falling profits were a sign of continuing economic difficulties. ― VNS