Hanoi (VNA) – The profits of many domestic banks in the first quarter of thisyear are estimated to rise higher than that of the same period last year thanksto significant credit growth.

After the first two months, Tien PhongCommercial Joint Stock Bank’s (TPBank) profits after provision for risky loansnearly doubled year-on-year to 275.8 billion VND (12.14 million USD). The bankposted outstanding loans at 76.78 trillion VND (3.38 billion USD) and amobilised capital of nearly 106.2 trillion VND (4.67 billion USD). Itsnon-performing loan ratio accounted for 0.97 percent of its total outstandingloans.

The general director of an HCM City-based bank,who declined to be named, said the bank’s pre-provision profit in the firstthree months of the year is estimated to be roughly 1 trillion VND (44 millionUSD). However, he said, in having to provision for the special bonds of theunsettled bad debts sold to Vietnam Asset Management Company (VAMC), the bank’sremaining profit in the first quarter is likely to be several hundreds of VND.With a favourable start, his bank expects a positive completion of the 2018target.

The leader of another bank with charter capitalof over 15 trillion VND (660.8 million USD) said that compared to the sameperiod in 2017, the bank’s profit in the first quarter is more positive thanksto the strong credit growth of some 3 percent compared with late 2017.

According to the State Bank of Vietnam (SBV),the credit growth of the entire banking system by the end of February8 increased by 2.04 percent compared with late 2017 to 150 trillion VND(6.6 billion USD). In the first quarter of last year, credit growth was at 2.81percent.

Besides the high credit growth, banks saidanother factor that has helped them prosper in the first quarter is thepositive bad debt settlement, as banks have not had to spend as much on riskprovisioning as in previous years.

Many banks have so far also impressedshareholders and the market with their profit plans at their annual generalmeetings (AGMs).

Opening the AGM season, Vietnam Technologicaland Commercial Joint Stock Bank (Techcombank) this month submitted a pre-taxprofit target of up to 10 trillion VND (440.5 million USD) in 2018 toshareholders.

The shareholders committee of Vietnam ProsperityCommercial Joint Stock Bank (VPBank) has so far also approved a 2018 pre-taxprofit target of 10.8 trillion VND.

Chairman of the board of directors (BOD) ofVietcombank Nghiem Xuan Thanh told tinnhanhchungkhoan.vn that the bankinitially set the pre-tax profit target at 12 trillion VND (528.6 million USD),but this target is likely to be raised to 13 trillion VND (572.6 million USD).These targets for 2018 suggest unprecedented high profits for banks in Vietnam.

Assessing the factors affecting the bankingsector in 2018, analysts of Saigon Securities Incorporation (SSI) said creditwill continue to be improved, in which the opportunity to proper of consumercredit segment is highly valued.

According to SSI, the average cost of capital in2018 will be reduced because of the government’s support policies and thesignificant improvement of the balance of payments in 2017 and 2018. 

Specifically, the operating and OMO interestrates were cut by 0.25 percent per year over the past year. The sale of stakein State-owned enterprises in 2018 will continue to attract a large amount offoreign capital, leading to the need to pump a large amount of local currencyinto the system. With the above factors, SSI forecast that profits at 14 listedbanks including will surge at an average of 32.9 percent in 2018.–VNA