Though the end of the July 2011, few banks have announced business plans for the last six months of the year. However, from viewpoints of some experts, the big banks are still profitable, while numerous businesses are facing difficulties.
Large banks gain big profit
According to the leaders of the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), in six early months Vietcombank gained a returns of about VND3000 billion. Currently, the Vietcombank’s charter capital is over VND17,587 billion and expected to increase to VND24,622 billion in 2011; total assets by the end of 2010 was VND307,496 billion and is scheduled to have reached VND353,620 billion by the end this year, the target of pre-tax profit offered in 2011 by Vietcombank is around VND5,650 billion, up 3.12 percent compared with the previous year.According to the leaders of the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), in six early months Vietcombank gained a returns of about VND3000 billion. Currently, the Vietcombank’s charter capital is over VND17,587 billion and expected to increase to VND24,622 billion in 2011; total assets by the end of 2010 was VND307,496 billion and is scheduled to have reached VND353,620 billion by the end this year, the target of pre-tax profit offered in 2011 by Vietcombank is around VND5,650 billion, up 3.12 percent compared with the previous year.
In addition to "big" Vietcombank, Joint Stock Commercial Bank of Industry and Trade of Vietnam (Vietinbank) despite not officially announcing profit figures, there are many branches of Vietinbank in the country have reached over 60 percent of this year plan. Typically, Vietinbank branch in HCM City by the end of June 2011 has mobilised its capital of over VND15,200 billion, up 7.8 percent compared with the end of 2010 and up 44 percent compared with the same period last year. The profits after being extracted for risk provision is over VND632 billion, reaching 66 percent of this year plan.
Additionally according Vietinbank, in the first six months in 2011, VietinBank Bao Loc has gained 72 percent of its profit plan. By 30 June 2011, the mobilised capital of the branch was VMD1,069 million completing 97 percent of this year plan. In particular, businesses deposits increased by 47 percent, civil deposits increased by 48 percent compared with the beginning of this year. VietinBank Hoa Binh continued running it business safely and efficiently: it gained 68 percent of the profit plan without bad debts, capital-mobilising market share increased by 3.6 percent. Mobilised capital reached VND556 billion completing 61 percent of the plan, and accumulated profit reached 68 percent of the plan.
According to the Joint Stock Commercial Bank of East Asia (DongABank), by 30 June 2011, the total assets of DongABank reached VND62,759 billion, up by 1.54 percent compared with the previous month, and equaling to 89.6 percent of this year plan. Mobilised capital of the bank reached VND55,189 billion, equaling to 91.9 percent of the year plan, total average credit outstanding per six early months was VND40,278 billion. The pre-tax profit (including subsidiaries) of the DongABank was VND676 billion, equaling to 52 percent of this year plan.
Besides DongABank, Sacombank also gained a high profit. According to Mr Dang Van Thanh, chairman of the Board of Director of Sacombank, the Sacombank’s profit (excluding subsidiaries) in June was VND301 billion. Accumulated capital in two early quarters of this year reached VND1,490 billion pre-tax profit, equaling to 55 percent of this year plan. Revenues from interest contributing to the total profit of Sacombank in the two early quarters in 2011 was 83 percent, of which revenues from credit operations accounted for approximately 40 percent.
An Binh Commercial Joint Stock Bank (ABBank) has also announced the business results in the first six months of this year. Accordingly, ABBank gained 46.3 percent profit targets of this year with VND307.6 billion pre-tax profit. Total assets of ABBank reached over VND38,955 billion, up 22 percent compared with the same period last year, and reached 81.2 percent of the year plan; mobilized capital from economic organizations and the civilians reached over VND25,940 billion, outstanding loans reached VND19,148 billion, completing 79.8 percent of the overall year plan.
However, only larger banks were profitable. Some small banks in the first six months achieved only 30 percent of this year’s profit targets. According to economic experts, the operations of the banks until the end of this year still have many difficulties. Ms Tran Thanh Hoa, General Director of ABBank assessed, “The market situation in 2011 is expected to have many difficulties, potentially there is the risk of high inflation, all banks should have appropriate strategies, forecasting and operating activities should be attached to reality, and strengthen financial capacity, and risk management to deal with possibly arising risks.
Large businesses also suffer from losses
In contrast to the colorful paintings of banks, many companies, even large companies and corporations faced with many difficulties.
According to Vietnam Cement Corporation (Vicem), in the first six months in 2011, the Vicem’s profit (after subtracting financial costs) reached VND314 billion, equaling to 25.1 percent of its plan. Meanwhile, the total investment of the corporation is VND12,500 billion. In comparison the total investment, profit took up only 2.3 percent. This figure is too little, and perhaps never before was the production of Vicem as difficult as it is today.
Le Van Chung - Chairman of Vicem, stated that with this profit, Vicem cannot afford to pay shareholders’ profit according to deposits interest. "Banks arelendingbusinesses with an interest rate of 22-24percent. In this context, surely only businesses that are “dying” will take the bank loan”, said Mr Chung.
A part from Vicem, Vietnam Industrial Construction Group ((VNIC) are also facing difficulties. It is estimated that within the first 6 months in 2011, the equity capital of VNIC reached VND 15,600 billion, while pre-tax profit was 560 billion which is 18 percent of the year plan (VND3,100 billion).
According to Mr Duong Khanh Toan, General Director of VNIC, the profit indicators of the corporation has never been so low in this year compared with in the previous ones. The main reason is because investors in the projects being constructed by the Corporation lack of payment capital leading to incomplete values, and liabilities of the Groups exceeded the capacity of the units. Meanwhile, that interest rates of bank loans are so high makes the project operate perfunctorily. In addition, that the plan for new construction was not significant enough relatively reduces production and business’s efficiency of the construction company. On the other hand, because the real estate market was “frozen” and fiscal policy is tightened for non-manufacturing sector, so VNIC faces more multiple difficulties.
Facing these difficulties, the businesses have proposed the State Bank to review loans for producing businesses, at least not to have a loss due to financing costs. Besides, the Government needs to direct and facilitate the investors to ensure their construction capitals, and needs to pay for the key project of the state.
Tran Quang Thai
Vietnamese
