Vietnam's banks set surprisingly high profit targets

Most commercial banks in Vietnam have set high profit targets for 2011 amid uncertainties of the economy and unpredictable macro-policies.

Most banks expect to achieve a profit growth rate of over 20 per cent.

A general director of a bank told Vietnam Finance News that most commercial joint-stock banks had to set high profit targets under the pressure of shareholders although they knew 2011 is not an easy year for both enterprises and lenders. However, banks can earn profits from many services, not only credit operations.

Pham Duy Hung, CEO of Vietnam Asia Commercial Bank, said this year his bank hoped to achieve a profit that is at least double that of last year and equal to the growth of the paid-in capital. By the end of last year, the blank’s chartered capital was increased from US$83.5 million to US$153.8 million.

Eximbank set a profit growth target of at least 26 per cent. Truong Van Phuoc, CEO of Eximbank, said that the bank expected to achieve a pre-tax profit of at least VND3 trillion this year.

Cao Thi Thuy Nga, deputy general director of Military Bank, admitted that there had been unexpected changes in recent years; so, banks are prudent in their business plans for 2011. The biggest thing affecting banking operations this year is new safety regulations which are stricter than earlier. “It will be difficult for banks to meet higher safety requirements and still attain their growth expectation,” Nga said.

Tien Phong Commercial Bank, a new lender on the market, also set an ambitious profit target that should be triple the figure in 2010. Phan Duc Trung, vice chairman of Tien Phong, said that the bank would focus on investment in technology with some US$20 million this year, and other banking services would be developed based on the strong technology foundation.

Nguyen Hung, CEO of VP Bank, said that the bank would invest in developing new savings and lending products in 2011. VP Bank plans to raise the non-credit profit ratio to 50-60 per cent of its total profit this year. The bank last year obtained US$33.3 million in pre-tax profit. The target this year is US$61.5 million.