Modest profits help banks regain optimism Banks have reported profits for the third quarter of the year after two gloomy quarters. They now can breathe easily again, though the profits were modest.  In late October, PG Bank, which is not listed among the big banks, reported the profit of VND60 billion. It made profit in almost the business sectors. The finance reports have not been made public, but big banks have all confirmed that they made profits and keep optimistic about the possibility of fulfilling the yearly business plans. Phan Duc Tu, General Director of the Bank for Investment and Development of Vietnam (BIDV), said the bank got the profit of VND3.8 trillion in the first nine months of the year, fulfilling 81 percent of the yearly plan. The bank has applied for listing its shares at the HCM City Stock Exchange for the second time after the failure in the first application. Vietcombank, one of the biggest Vietnamese banks, has not reported the business result. However, a report of SSI Research showed that the bank has estimated the pre-provisioning profit of VND6.7 trillion and pre-tax profit of VND4 trillion. Phan Huy Khang of Sacombank estimates the profit of VND2.2 trillion by the end of the third quarter. The bank’s credit had grown by 13 percent by the end of September, which may rise to 18 percent by the end of the year. Regarding the non-performing loans, Khang said the ratio is 2.26 percent of the total outstanding loans, while the bank now works out with the Vietnam Asset Management Company (VAMC) on the sale of VND1 trillion of non-performing loans. SeABank, which has advantages in lending to small and medium enterprises, said it can foresee the modest profits. The enterprises, which are in big difficulties, don’t want to borrow capital at this moment, thus making it difficult for the bank to increase the outstanding loans. A senior executive of the bank said the credit growth rate of the bank had reached 7 percent by the end of the third quarter. The enterprises’ bad heath, low credit demand and the decreasing lending interest rates all make banks’ profits decrease. However, analysts believe that the banks will fulfill their 2013 business plans. Shareholders, anticipating the big difficulties earlier this year, set modest targets for the boards of management. The general director of a joint stock bank said the banks which had relatively high profits were the ones which could collect debts, thus reducing their non-performing ratios. Meanwhile, other banks made money by lending individual clients, a good solution in the context of the gloomy economy, where exhausted businesses don’t borrow capital to expand their production. Khang of Sacombank also said the income from individual clients in the third quarter increased considerably in comparison with the same period of the last year and made up 45 percent of the total profit. A recent survey conducted by Ernst & Young on 50 financial institutions in 10 markets with fast growth rates, including Vietnam showed that bankers all think that the number of loans to individuals would increase rapidly in the future. The survey has found that Vietnamese banks put high hopes on the development of credit cards. K. Chi, VietNamNet Bridge