Many banks were estimated to meet 25-30 per cent of their annual profit targets by the end of March, although the first quarter is usually the most sluggish for banks.

According to Luu Trung Thai, general director of Military Bank, the turnover of his bank in the first quarter is estimated at VND3.5-3.6 trillion (US$154.2-158.6 million), while the minimum pre-tax profit is at some VND1.6 trillion, up 44 per cent year-on-year.

With the rise, Thai believed that it is feasible for his bank to meet the VND6.8 trillion profit target set for this year, up 47 per cent against last year.

Chairman of VIB Dang Khac Vy said his bank’s cost-income ratio reached 52 per cent and pre-tax profit exceeded VND500 billion in the first quarter, three times higher than the same period last year.

By the end of the first quarter, VIB met 25 per cent of its total pre-tax profit target of VND2 trillion set for 2018.

With a monthly profit of some VND350 billion, HDBank estimated its profit to reach nearly VND1.05 trillion in the first quarter, three times higher than the same period in 2017. With a profit target of VND3.9 trillion for 2018, the bank has already met 28 per cent of the annual plan.

Orient Commercial Joint Stock Bank’s profit by the end of March also tripled that of the same period last year to reach more than VND600 billion. The bank plans to earn a profit of VND2 trillion this year.

LienVietPostBank achieved 28 per cent of the annual profit target as it posted a pre-tax profit of more than VND500 billion by the end of the first quarter.

Experts attributed the positive business performance of banks to the credit growth right at the beginning of the year. According to the National Financial Supervisory Commission, outstanding loans in the banking system, as of March-end, were estimated to have risen by 3.5 per cent against December last year, of which loans in Vietnamese dong increased by 3.3 per cent and accounted for 91.9 per cent of total outstanding loans.

Besides the high credit growth, another factor that has helped the banks prosper in the first quarter is the positive bad debt settlement as banks have not had to spend as much on risk provisioning as in previous years.

Assessing the factors affecting the banking sector in 2018, analysts of Saigon Securities Incorporation (SSI) said credit would continue to be improved, in which the opportunity of consumer credit to prosper was highly valued.

According to SSI, the average cost of capital in 2018 will be reduced because of the Government’s support policies and significant improvement in the balance of payments in 2017 and 2018. Specifically, the refinancing, rediscount, overnight and OMO (open market operations) interest rates were cut by 0.25 percentage points per year over the past year.

The sale of stake in State-owned enterprises in 2018 will continue to attract a large amount of foreign capital, leading to the need to pump a large amount of local currency into the system, SSI said.

Considering the above factors, SSI predicts that profits in 14 listed banks will surge at an average of 32.9 per cent in 2018. — VNS