Before the situation of the financial and currency market in the fourth quarter, which is not as expected, many banks said that to achieve profit targets would not be easy, though the targets in 2010 are relatively modest.
The reason is that in order to meet the requirements of Circular 19/2010/TT-NHNN (which amended Circular 13/2010/TT-NHNN) regulating that commercial banks are only able to use 80 percent of mobilised capital to provide credit, banks must promote mobilisation of idle money from the population, thus it is very difficult to cut the cost of raising capital.
Meanwhile, since SBV requires banks not to apply deposit rate of over 14 percent per annum, difference between input and output interest rate is narrowed, leading revenue from credit activities to be lowered, thus profit is affected.
Leader of DongA Bank said its profit this year is probably just slightly higher than the completed figure of last year (Dong A Bank obtained 750 billion dong profit before tax in 2009).
Whereas, according to the initial plan, profit target of DongA Bank in 2010 is expected to be 1.1 trillion dong. Leader of this bank said the reason is the slowdown of growth in credit outstanding in the fourth quarter.
The result of credit this year is not as good as of last year is due to the pressure of negotiable lending has been increased accordingly to the mobilisation costs, causing customers in need of capital, especially businesses, to no longer be interested in using borrowed capital. On the other hand, banks do not dare to approve loans to all customers, since the potential risk of bad debt is very high when borrowers accept to borrow at 18 to 20 percent per annum.
At VietA Bank, the profit target set in early 2010 was 498 billion dong, but it was later adjusted to 300-350 billion dong. Before the difficulties of the market in the last months of the year and the recent significant interest rate rise, even the adjusted profit target would hardly to be achieved.
Although Techcombank set pre-tax profit target of 3.467 trillion dong in 2010, according to general director of this bank Nguyen Duc Vinh, Techcombank has just achieved 2 trillion dong pre-tax profit in the first 11 months of the year. Thus, compared to the planned target (even it has been adjusted), to late November 2010, it is very difficult for this bank to obtain the target.
In the recent interest rate fluctuation, Techcombank was one of the banks that pushed deposit rates to the highest level on the market (17 percent per annum) and under regulations of SBV, it had to decreased rapidly to a ceiling level of 14 percent per annum.
Nevertheless, some banks are confident in completing or even exceeding the planned profit targets. For example, Chair of Sacombank, Dang Van Thanh said in the first 11 months of 2010, his bank has obtained 91.3 percent the profit target of the whole year, thus, the profit target in 2010 would be achieved and may be exceeded.
At Eximbank, to the end of November 2010, 2.107 trillion dong pre-tax profit has been obtained, equivalent to 95.8 percent of the whole year target. Profit after tax of Eximbank in the first 11 months of 2010 was 1.612 trillion dong, equivalent to 96 percent of plan.
According to Eximbank, pre-tax profit and after-tax profit of the bank would be respectively at least 2.2 trillion dong and 1.680 trillion dong, completing the targets set in the beginning of the year.