Higher credit growth could increase listed banks’ profits

The profits of the seven listed banks could rise 32.16 per cent against the beginning of 2017, if this year’s credit growth target is raised to 20 per cent.

The profits of the seven listed banks could rise 32.16 per cent against the beginning of 2017, if this year’s credit growth target is raised to 20 per cent.-Photo BIDV

These estimates have been made by HCM City Securities Company’s (HSC). The seven listed banks, which include Vietcombank, Vietinbank, BIDV, ACB, Military Bank, Sacombank and SHB, have earned VND18 trillion in pre-tax profit in the first six months of the year, up 22.7 per cent year on year, HSC stated.

At a Government meeting last week, Prime Minister Nguyen Xuan Phuc asked the State Bank of Viet Nam to consider raising the credit growth limit for this year to at least 20 per cent instead of the 18 per cent as per the previous plan, so as to support the country’s economic growth target of 6.7 per cent.

If the credit growth limit stays at 17.2 per cent as planned at the start of 2017, HSC forecasts that the seven banks will collectively earn VND36.2 trillion in pre-tax profit for the whole year, recording 18 per cent growth.

If credit growth is loosened to 20 per cent and other factors remain constant, the pre-tax profit of these banks could be 12 per cent higher, or around VND40.54 trillion, up 32.16 per cent from the beginning of the year. This assumption is based on the maintenance of current variables, HSC said.

In the first half of 2017, credit growth reached 9.06 per cent, the highest level in the past six years.

According to HSC, because of low inflation pressure, it is safe to boost credit growth a little more. At present, there are not many macro risks associated with increasing credit growth as in the first six months, the CPI rose only by 2.52 per cent year on year, while the exchange rate has stabilised after rising 1.2 per cent in the beginning of 2017, it said.

Source VNA