The season of annual shareholders meeting will begin next month and commercial banks have been cautious while setting business targets for this year in the context of slow bad debt settlement and high risk provision, Dau tu chung khoan (Securities Investment) newspaper reported.

Although it had good results last year, HDBank said it has set a conservative profit target this year. According to the bank, there are certain difficulties, although the business environment is favourable as credit is forecast to gradually improve in 2017.

HDBank will submit the 2017 business plan at its shareholders meeting on April 21. According to the plan, the bank sets estimated pre-tax profit of VND1.643 trillion (US$72.37 million), up 28 per cent against 2016. The bank’s outstanding loans are targeted at VND123.491 trillion and bad debt ratio is estimated at less than 1.5 per cent.

Last year, HDBank posted a high record pre-tax profit of VND1.282 trillion, up 63 per cent against the previous year.

Orient Commercial Joint Stock Bank (OCB) has also been cautious while making its 2017 business plan despite witnessing many positive business indicators last year. The bank plans to submit to its shareholders committee for approval total asset growth of 33 per cent, reaching VNĐ85 trillion, and pre-tax profit of VND780 billion, up 60 per cent year-on-year.

Last year, OCB successfully completed its 2016 target of VND484 billion pre-tax profit, up 81 per cent against 2015.

At the Export Import Commercial Joint Stock Bank (Eximbank), general director Le Van Quyet said the bank needs to be circumspect in preparing its business plan to submit to shareholders at the upcoming shareholders meeting because the bad debt ratio of the bank was still approximately 3 per cent in late 2016, and thus the pressure of risk provision would significantly affect profit target.

Not only small- and medium-sized banks, larger banks also seem to be erring on the side of caution.

After achieving a 23.4 per cent rise against 2015 to VND8.2 trillion pre-tax profit in 2016, Vietcombank has set a target of 12 per cent in 2017 to VND9.2 trillion. The bank also expects to see 11 per cent total asset growth, 18 per cent credit growth, 15 per cent mobilisation growth and bad debt ratio of below 1.5 per cent.

Agribank also aims to achieve profit growth of 10 per cent in 2017.

Expert Bui Quang Tin from HCM City Banking University said the challenge in 2017 for banking activities continues to be the settlement of bad debts. If the handling of bad debts is not accelerated, the rising pressure of risk provisioning will continue to erode banks’ profits.

Head of the Economic Research Division at Dragon Capital Le Anh Tuan said the set profit figures reflect the real capacity of banks. However, banks’ annual profit achievement has been prioritised with provisioning for risks in mind, especially banks that have high bad debt ratio. This means shareholders of banks will have to forego benefits and should not expect to receive dividends in the long run. — VNS