According to a source with the Ministry of Planning and Investment, who did not want to be named, many banks have to date only realised between 20 and 30 per cent of their annual profit targets.— File Photo

HCM CITY (Biz Hub)— Commercial banks are pessimistic about their profit prospects for this year, with many expected to fall far short of their annual targets.

According to a source with the Ministry of Planning and Investment, who did not want to be named, many banks have to date only realised between 20 and 30 per cent of their annual profit targets.

As the year's peak business season nears, banks are only expecting the period to help improve their credit growth, not fulfill their profit plans, the source said.

A deputy general director of a medium-sized commercial bank in HCM City, who declined to be named, also said that although his bank's profit target for 2013 was modest at about VND450 billion (US$21.32 million), it was only able to achieve 25 per cent of it in the first nine months of the year.

He blamed the situation on weak credit growth since the bank's customers, most of them enterprises, did not want to borrow capital.

Meanwhile, the bank could not push up provision of personal loans since that segment was not the strong point of small and medium-sized banks.

Bad debts were another big problem, he said.

"Our bank has already made several efforts to restructure customers' debts so that they can repay old debts and take new loans.

"However, the situation has not improved much since we find it difficult to compete with major banks in attracting well-performing enterprises. Lending to enterprises in difficulties carries a much higher risk, of course."

Low expectations

Oceanbank Chairman Trinh Van Tuan also said that in the current context, the most important focus for his bank was how to manage and minimise business risks.

However, despite the situation, the bank still was seeking ways to make profit to ensure its shareholders' interests, he said.

"As usual, the banks' profits often increase in the fourth quarter of the year. But it is not expected to rise much this year," Tuan said.

OCB's profit target for 2013 was set a modest VND320 billion (US$15.16 million) and the bank actually met 50 per cent of the target in the first six months, but it still does not expect to realise the annual plan, he added.

In the first nine months of the year, Nam A Bank's credit growth of 30 per cent far exceeds the limit assigned by the central bank, but it is still finding it difficult to realise the yearly profit target, according to its deputy general director Tran Ngoc Tam.

For years, Eximbank has achieved high credit growth rates, but the 8 per cent it has recorded in the first nine months shows its annual target of 15 per cent may not be reached, putting its profit plans in the same boat.

Eximbank chairman Le Hung Dung said that the bank expected to achieve just 50 per cent of its pre-tax profit target for 2013.

In a recent report on the Asia Commercial Bank, the Bao Viet Securities Company said that the former had made VND1,569 billion in pre-tax profits in the first nine months of the year, accounting for 52.5 per cent of the year's target and registering a growth rate of 9.5 per cent.

However, a high ratio of bad debts, estimated about 3.09 trillion ($147 million), requires ACB to make greater provisions for them. Hence the bank will find it difficult to realise its pre-tax profit target of VND1.8 trillion by the year-end, the report says.

Similarly, in the first nine months of the year, Vietcombank earned about VND6.7 trillion in pre-tax profits, accounting for nearly 70 per cent of the year's plan. However, with a bad debt ratio of around 3 per cent, it had to set aside VND2.7 trillion.

Therefore, with just VND4 trillion in profit until now, the bank will find it a challenge to realise its annual target of VND5.8 trillion.

Sacombank, likewise, has been recognised as one of the commercial banks that have achieved a high credit growth of 13.4 per cent in the first nine months of the year.

Despite this impressive achievement, it is struggling to achieve the year's profit target of VND3 trillion, its senior officials have said. — VNS