Banks face struggle for profits in final quarter

Banks face struggle for profits in final quarter

Sagging commercial bank profits are unlikely to improve in the final quarter of the year, forecast Vietcombank Securities Co in its latest report.

While many banks were therefore concerned about failing to meet their profit targets for the year, Vietinbank was among a few banks with brighter prospects.

According to the report, Vietinbank was on track to be the nation's most profitable bank this year, posting an impressive net profit of VND4.5 trillion (US$214.28 million) in the first three quarters. The bank has projected total profits this year of nearly VND7.7 trillion ($365 million), exceeding its initial target of VND6.7 trillion ($321 million).

"The credit growth of Vietinbank will continue to improve in the fourth quarter, and its income from service fees will also increase significantly thanks to rising overseas remittances," said the report.

Along with Vietinbank, Military Bank was expected to see a surge of nearly 36 per cent in pre-tax profit this year, posting a profit of VND3.6 trillion ($170 million) by year's end. The report noted that the picture for interest and service revenues in the fourth quarter was optimistic, while Military Bank's losses from financial investments were minor.

The report predicted that the credit growth of Vietcombank in the fourth quarter would be roughly 13 per cent, due largely to preferential lending interest rates offered by the bank. This would help lift Vietcombank's pre-tax profits this year by about 4 per cent over last year to roughly VND5.9 trillion ($281 million), and allowing the bank to roughly meet its profit target for the year, the report said.

Sacombank, meanwhile, was expected to fall short of targets. The report predicted that the bank would only reach about 85 per cent of its pre-tax profit estimation of VND2.9 trillion ($137 million).

"Sacombank's deposit growth will remain strong in the fourth quarter," the report said. "However, as it covers its losses from securities investments, it will make it difficult for the bank to make strides in its foreign exchange and service revenues."

Eximbank's profits this year were also now expected to decline by over 25 per cent from last year's level to only about VND3 trillion ($144 million).

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