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Banks embarrassed by profit targets for 2010   2009-01-25 - DTCK

Commercial banks, which have been warned about difficulties in 2010, do not want to set overly high profit targets for 2010. However, with them facing shareholders’ pressure, they also don’t want to set targets too low.


Difficulties anticipated


The Government has sent a clear message that the credit growth rate in 2010 must not exceed 25 percent – a rate that is much lower than the 38-39 percent in 2009. Once the central bank tightens the monetary policy, banks will have less room to develop credit in 2009, when the Government launches a four percent interest rate subsidy programme to stimulate the economy.


Economists have pointed out that Vietnam will face many difficulties in its efforts to boost exports. Countries across the world are now relying on domestic markets to revive their economies, which is prompted them to protect local production and restrict imports. Therefore, the targeted GDP growth rate of six percent and inflation rate of 6-7 percent in 2010 may prove to be ambitious plans.


Meanwhile, banks will lose a source of earning from gold trading floors in 2010, since trading floors will have to shut down by the end of March as per instruction by the Prime Minister. Meanwhile, gold trading floors have been referred to as “the goose that laid golden eggs” for banks


How high should profits be?


A general director of a joint stock bank told Dau tu chung khoan that his bank still cannot set profit targets for the 2010 fiscal year. With chartered capital of over 8 trillion dong, the bank is under pressure not to set merely modest profit targets which may displease shareholders.


It follows an incident in 2009 when major shareholders got angry when Eximbank set a target of obtaining 1,500 billion dong worth of pretax profits for 2009, while its chartered capital was over 7 trillion dong.


Many bankers still say they are “listening to the news” from other banks before setting business plans for themselves.


Chairman of Sacombank Dang Van Thanh said his bank has set a plan to target of 2,600 billion dong worth of profit in 2010. The profit in 2009 has not yet been declared, but sources say it is some 2,100 or 2,200 billion dong.


Nguyen Hoa Binh, chairman of Vietcombank, said the profit plan targeted by Vietcombank will not be much higher than the actual profit the bank obtained in 2009, estimated at around 5 trillion dong


Asia Commercial Bank has also said that the targeted profit in 2010 will not far exceed the 2,818 billion dong obtained in 2009.

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Sacombank receives two new international awards   2009-01-22

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HSBC: Vietnamese businesses stay optimistic amid economic recession   2009-01-16

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HSBC predicts a more difficult year 2009 for Vietnam’s stock market   2009-01-13