Commercial banks posted solid earnings in 2010 with an average growth in profit of over 20 percent, most of which came from lending and foreign exchange trading.

Partly-equitised Vietinbank posted a pre-tax profit of 4.37 trillion VND (203.25 million USD) for the year, up 48 percent over 2009, while Vietcombank also saw its pre-tax profit rise by 21 percent to 5.4 trillion VND (252 million USD).

"Most of our profit came from credit operations, with institutional borrowers accounting for 70 percent of total outstanding loans," said Vietinbank Chairman Pham Huy Hung.

Maritime Bank reported robust profit growth of 51 percent against the previous year, with a pre-tax profit of 1.52 trillion VND (70.69 million USD). Military Bank earned 2.1 trillion VND (97.67 million USD), a year-on-year increase of 50 percent.

Eximbank, Sacombank, LienViet Bank, An Binh Bank and Habubank fetched profits of around 613 billion VND to 2.4 trillion VND, up 20-55 percent against 2009.

However, profits of Asia Commercial Bank (ACB) grew by just 9 percent in 2010, totalling 3.1 trillion VND (144.2 million USD).

ACB General Director Ly Xuan Hai said the bank insisted on keeping lending interest rates low rather than racing other banks to increase borrowing costs.

"We see a profit of 3.1 trillion VND as acceptable," Hai said.

However, some market observers assumed that ACB's profit growth slowed due to the Government shutting down its gold trading business which had been a key profit centre for the bank for years.

Ocean Commercial Bank reported a profit of over 691 billion VND (32.13 million USD) for 2010 and also exceeded profit forecasts for the year.

But the bank's general manager Trinh Van Tuan said opportunities would not come as easily as they had in the past two years given the tightening monetary policy.

OceanBank has set a profit target of 1 trillion VND (46.5 million USD) for this year, an increase of 44 percent over 2010 but far lower than the 100-per-cent increase it saw last year.

Maritime Bank Deputy Director Nguyen Dinh Tung said difficult conditions seen last year would linger on into this year.

"Monetary tightening can cause difficulties for the banking system. High interest rates discourage customer borrowing," said Tung.

Tran Hoang Ngan, a member of the National Monetary Policy Advisory Council, said banks would face certain difficulties this year as the State Bank of Vietnam had targeted to control credit growth at just 23 percent in 2011, significantly lower than actual 2010 credit growth of 27.65 percent.

Military Bank Deputy Director Cao Thuy Nga said the bank was targeting profit growth of 30-40 percent this year. Meanwhile, Sacombank will ask shareholders next month to approve a target of 2.8 trillion VND (130.23 million USD) for this year, a figure that would constitute a year-on-year increase of 16 percent. /.