Many banks have announced their first quarter
earnings that were higher than in the same period last year even though the
economy is still in a bad way.
Vietnam
Bank for Industry and Trade (VietinBank) reported 1.39 trillion dong in
aftertax profit in the first quarter, up 60.4 percent from the year-ago period.
The rise partly resulted from a strong drop in risk provisions from 1.98
trillion dong in last year's first quarter to 845.4 billion dong in quarter one
this year.
Military
Bank is also on the list of banking institutions earning big with the first
quarter's net profit amounting to 1.6 trillion dong and pre-tax profit reaching
885 billion dong, which rose over 36 percent and around 25 percent year-on-year
respectively. But a rise of 257 billion dong in its risk provisions affected
this bank's profit.
Meanwhile,
Asia Commercial Bank (ACB) obtained a pre-tax profit of 960 billion dong, compared
to the 900 billion dong achieved in the year-ago period.
The
pre-tax profit of Saigon Thuong Tin Commercial Bank (Sacombank) was around 1
trillion dong, up nearly 71 percent from the year-ago period. Its foreign
exchange and securities services started to be profitable again with 45 billion
dong and 75 billion dong respectively.
However,
in the current tough economic conditions, such high profits of banks are not a
healthy sign because most profits resulted from the difference between deposit
and lending rates, said Le Dat Chi, a lecturer at the HCM City University of
Economics.
Chi
said the lowering on March 7 of the deposit rate cap to 13 percent had yet to
affect banks' profitability in the first quarter. Banks may scramble to cut
deposit rates while keeping lending rates unchanged, thus leading to higher
profits, he added.
He
noted such high profit figures showed banks lacked a symbiotic relationship
with enterprises as seen in other countries where banks often incur losses in
times of economic hardship. But it is the opposite in Vietnam, with banks
earning high profits at a time of enterprises struggling for survival.
Chi
said monetary policy should be designed in a way that makes it easy for
enterprises to gain access to loans and that punishes banks that do not reduce
lending rates in sync with deposit rates.
"If
deposit rates are reduced while lending rates are not, the lowering of the
deposit rate cap to support enterprises is effectively neutralised," he
said.
Saigon
Times
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