ID :
35836
Tue, 12/16/2008 - 14:47
Auther :

Banks prepare for tough year ahead with lowered targets

HCM City (VNA) - Many commercial banks in Ho Chi Minh City plan to set
every modest profit targets for 2009 in anticipation of low credit growth as the
nation continues to face economic difficulties.

The Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) is one of the
city's major commercial banks that typify the trend.

The bank estimates profits of 1.5 trillion VND next year, about the same as this
year.

Dang Van Thanh, Chairman of Sacombank's Management Board, said: "The bank's
pre-tax profit in the last 11 months was over 1.1 trillion VND (66.6 million USD)
and it is estimated at about 1,200 billion VND by the end year."

"This is 300 billion VND lower than the plan set for the year," Thanh said.

Deposit interest rates have been reduced, but local commercial banks have faced
many difficulties in lending since most enterprises could not sell their products
and had no incentive to borrow capital and expand production, Thanh said.

The situation is not going to be much better next year, he said.

Tran Phuong Binh, General Director of Dong A Commercial Joint Stock Company (DongA
Bank), said most of the profits that local commercial banks earned this year were
generated from capital sources of the previous year when interest rates for
mobilising capital were still low.

Many banks were making losses now since many borrowers who took out high
interest-rate bank loans months ago are seeking credit on the black market to pay
off their loans before their maturity date. To make matters worse, the banks are
having to pay interest on many high interest-rate deposits whose terms have not
ended yet, Binh said.

He predicted that commercial banks' credit turnover would continue going down in
the coming months. With 70 percent of their profits earned through lending, this
is bound to hurt the banks.

In face of such difficulties, Binh said, Dong An Bank has set a target of
achieving 900 billion VND in profit in 2009, an increase of only 200 billion VND
over this year.

Binh also said that the new profit target would likely be adjusted if the
situation in international and domestic monetary markets took a turn for the
worse.

To make up loss of profits due to low credit growth, many banks were struggling to
increase turnover from other services but this is not an easy task, he said.

Ly Xuan Hai, General Director of the Asia Commercial Joint Stock Bank (ACB), said
that although the bank has not officially set next year's target, it is not likely
to be higher than this year's figure of about 2.5 trillion VND.

Current developments in the monetary market indicate many difficulties that the
banks have to prepare for, Hai said.

Smaller commercial banks, meanwhile, have lowered their profit targets set for
this year themselves, and are not revealing the profits they have earned so far.


They are also being very discreet about their profit targets for the new
year.-Enditem


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