Small banks strive to reach annual targets
HCM CITY — Modest lending by smaller commercial banks in the first half of the year has put them under pressure to complete their annual profit targets. While many major commercial banks have posted profits equivalent to 50 per cent of their annual target, lending activities of many small banks have lagged behind, the Dau Tu (Investment) weekly reports.
The Lien Viet Joint Stock Commercial Bank (LienVietBank) has just announced pre-tax profits of VND350 billion (US$18.42 million ) by July 10, just 30 per of the annual target.
The outlook is not much better at the Orient Joint-Stock Commercial Bank (OCB) which generated pre-tax profits of VND174 billion, much lower that the yearly target of VND400 billion.
The Great Trust Joint Stock Commercial Bank (TrustBank) set a target of earning VND290 billion in pre-tax profits, including VND190 billion from credit activities. However, its first half pre-tax profit of VND70 billion makes the annual target a very tough one.
Commercial banks are also facing other obstacles to meeting their annual targets, the paper quotes market analysts as saying.
To accelerate their credit activities, the banks have to drop their lending rates but they cannot do it without reducing deposit rates to the needed level.
Mobilising capital has also become more difficult at this time. After deposit interest rates were adjusted in the first two weeks of July, the money from people's savings deposited with the banks decreased significantly.
In recent years, many commercial banks have managed to increase their sources of revenue through several services in order to reduce their dependence on credit activities. However, most commercial banks have not recorded any significant success with this strategy.
Experts also said that in the coming time, banks would be more careful with their credit development so as to ensure the efficiency of capital use. They are required to increase their capital adequacy ratio from the current 8 per cent to 9 per cent from October 1 onwards.
At its current pace in credit growth, the banking sector will find it difficult to realise the growth target of 25 per cent set for the year, according to Le Duc Thuy, chairman of the National Finance Supervision Committee. — VNS