Though having fulfilled nearly 50 percent of the yearly business plan in the first half of the year, banks still say they are under hard pressure when doing business. Credit remains the main source of income of banks, while the credit has been growing very slowly recently.

Lien Viet Bank has reportedly obtained the pretax profit of 350 billion dong by July 10, 2010. Meanwhile, the bank plans to attain 900 billion dong in pretax profit in 2010. As such, after the first two quarters of the year, Lien Viet had fulfilled 30 percent of the yearly business plan only.

OCB also said in the first half of 2010, the pretax profit the bank obtained was modest, at 174 billion dong, far below the profit of 400 billion dong targeted for the whole year 2010.

In the first six months of 2010, Trust Bank obtained 70 billion dong in pretax profit from its banking operation. Earlier this year, the bank planned to get 290 billion dong in pretax profit, including 190 billion dong from banking operation and 100 billion dong from other operations.

In order to expand credit, banks need to cut down lending interest rates. However, the problem is that banks still cannot ease the lending interest rates while they still have to seek capital at high costs. After banks cut interest rates in the first two weeks of July, the deposits flowing to banks have been slowing down, while the lending has not been satisfactory.

To date, banks have still been relying on developing credit to obtain the desired profit. Eximbank, for example, in the first six months of the year, got 918 billion dong in pretax profit, an increase of 12 percent over the same period of the last year, and 42 percent of the yearly profit (the bank plans to earn 2,200 billion dong in pretax profit, higher than the last year’s level of 1,500 billion dong). The profit of 918 billion dong was obtained by the bank after it lent up to 42 trillion dong to clients, increasing by 11 percent over the end of 2009. Meanwhile, the income from gold trading, stock investments and foreign currency trading decreased sharply.

Over the last many years, banks have been trying to gradually restructure their income by reducing the income from credit and increasing the earnings from services, in an effort to reduce the reliance on credit. However, the income brought by credit remains modest.

Therefore, banks said they still cannot say for sure if they can fulfill the yearly business plan. The plan fulfillment will still depend on how banks can expand credit in the last five months of the year, while it will be very difficult to do that in the coming time.

Analysts have warned that the market conditions are not favorable for banks to push up lending.

Le Duc Thuy, Chairman of the National Finance Supervision Council, also said it would be very difficult to obtain the 25 percent credit growth rate as planned.

Source: Dau tu chung khoan