Commercial banks have rejected claims that they are making huge profits, saying they even earn less than companies in other sectors, according to a report by local newswire VnExpress.
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Hanoi-based Techcombank, for instance, is set to post a full year profits of more than VND2.2 trillion (US$120 million) while the figure for Vietnam Maritime Joint Stock Bank will be VND1 trillion.
But Nguyen Duc Vinh, general director of Techcombank, said it is not right to conclude that banks are making hefty profits based on such figures.
“The average return on equity of local banks is only between 15 to 20 percent, much lower that most other commercial companies,” Vinh said.
Nguyen Huong Loan, deputy general director of Maritime Bank, agreed with Vinh, saying local banks often announce their profit figures, instead of other ratios like return on equity or return on assets.
Banks make money on their assets, which are 20-30 times higher than their registered capital, she said. For her bank, the return on assets was only 1.5 percent and return on equity was 33 percent.
Duong Thu Huong, general secretary of the Vietnam Banks Association, said in the VnExpress report that the profits earned by local lenders were reasonable. She also said it was the solid profitability that would help the banking system weather difficult economic times like this year.
But economist Bui Kien Thanh said local banks are posting profit rates 10-20 percent higher than banks in the US simply because they don’t take a lot of risk management measures.
Local banks should be more cautious as high profit rates in the banking sector also mean high risks, Thanh said.
VietNamNet/Thanh Nien
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