Banks see profits fall but remain optimistic

HA NOI (Homeid) — While most credit institutions(CIs) see potential risks in the banking system due to the level of bad debt, they also see brighter prospects for the second half of the year, according to a recent survey by the State Bank of Viet Nam (SBV).

Banks see brighter prospects for the second half of the year.— Photo thanhtravietnam.vn

 

The survey of business trends, carried out by SBV's Department of Statistics revealed that 124 CIs around the country have stated that bad debt remains a major issue and subsequently business results for the first 6 months were not as good as expected.

According to the survey, the most important factors that impact on banks are the business environment and customer risk. However the risk level of certain customer groups rose during the first 6 months of the year. This has resulted in fifty per cent of CIs warning that their bad debt ratio could exceed that of 2012.

On top of this, more than 50 per cent of CIs report that their pre-tax profits fell in the first six months of 2013 compared to the last six months of 2012, recording a drop of between 20-30 per cent.

Business outlook to brighten in next 6 months

At the same time, CIs were more positive about the next six months when the economic recovery will bolster capital and encourage credit growth, improving profits. More than half of the banks interviewed (55.1%) said they expect their business outlook to improve this year with an increase in customers when deposit rates and capital loans will be lowered over the next 3 and 6 months.

While more than 70 per cent of CIs expect to see bigger profits, they will remain fairly modest, coming in at under10 per cent. — VNS

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