Smart strategies have helped Vietnamese banks rake in the profits in the first half of the year despite the global financial and banking crisis.

Though the country’s economy has been fortunate to escape the worst effects of the meltdown, banks did face some serious difficulties, the biggest being the sharp fall in loan interest rates as part of the Government’s stimulus policies.

On the other hand, they continued to pay the very high interest rates (19 percent) on deposits they had been forced to offer last year since these, unlike loan interest, are fixed for the entire term.

Following a few months’ lull, the banks were again forced to hike deposit rates recently to around 10 percent because of a liquidity crunch.

But with the central bank holding rates steady, they were unable to increase loan interest rates that remain at 10.5-13 percent.

The interest rate spread on the USD is even lower at around 1.5 percent.

With lending not being a very profitable option, the banks turned their attention to fee-based services.

They tied up with government agencies, companies, and other organisations to pay employees their salaries through bank accounts, thus getting access to large sums of money at low interest rates.

They also pushed ahead with payment and remittance services for companies and individuals.

They set up gold and property trading floors and financial leasing arms and sold insurance.

To improve functioning, they transferred more power on branches and focused on risk management based on international norms to minimise possible losses.

Thanks to their attractive wage and other policies, many banks have managed to attract talents, enabling them to function efficiently.

The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) was the most successful, with first half profits of 2.45 trillion VND (137.6 million USD), or 74 percent of the whole year’s target of 3.32 trillion VND.

It has now revised its pre-tax profit target for the year to 5 trillion VND.

Most of its profits have been generated from forex trading, international payments, domestic and overseas cards, and financing foreign trade.

The Lien Viet Joint Stock Commercial Bank earned 340 billion VND in the first half and said it was derived mainly from the money market, derivatives, and investments in the bond market.

Several other banks too reported vastly improved performances over last year./.