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Thursday June 21, 2012

Weaker 2011 results for banks in Vietnam


HANOI: Banks in Vietnam had weaker financial performance in 2011 than the year before and their bad debts recently have been “rising continuously”, the central bank said in a report.

The State Bank of Vietnam said that the country's banks last year had slower profit growth as well as reduced rates of return on equity and return on assets.

The government adopted tight fiscal and monetary policies in 2011 to help control inflation, which affected the performance of banks and businesses, with many enterprises facing bankruptcy, the central bank said.

The report comes at a time of concern about some Vietnamese banks, given the tight policies and slowed economic growth. The government has started restructuring the financial system and seeking to get some banks to merge, but analysts said its steps had been behind schedule.

Half of all lenders recorded lower profit last year and 10% of them faced losses, the central bank report said without naming any banks or giving figures for the their earnings results.

The report said that overall profit growth of banks slowed in 2011 to 15.1%, but it did not give any comparable figure for 2010.

The return on equity (RoE) of Vietnam's banking system was 11.86% last year compared with 14.56% in 2010, and the 2011 return on assets (RoA) dropped to 1.09% from 1.29% the previous year, the report said.

Banks in South-East Asia have RoE of 14%15%, it said.

The report did not comment on the outlook for banks in 2012. But it expressed concern about bad debts.

“The absolute value and bad-debt ratio of banks have been rising continuously, especially in the last months of 2011 and early in 2012,” the report said, citing bank inspectors.

Bad debts in Vietnam hit US$5.18bil, or 4.14% of total loans as of April, up from 3.06% in 2011, due to economic difficulties faced by businesses, state-run media on Tuesday cited a central bank report as saying.

Earlier this month, governor Nguyen Van Binh told the National Assembly that the system's bad debt had risen to 10% of loans from 6% earlier, but he gave no specific timeframe.

Nearly 50 banks operate in Vietnam, including three fully state-owned lenders, 39 partly private banks and five fully foreign-owned banks. - Reuters

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