Total net profits in the banking industry last year increased by 15.1percent over 2010, a rate lower than that of the preceding severalyears, the State Bank of Vietnam announced on June 20.
Nearly half of all lending institutions saw their profits tumble in 2011, and over 10 percent of those suffered losses.
"Generally speaking, credit institutions' profitability last yearmatched the scale of their assets, ownership capital and managementcapacities, as well as the difficult economic conditions," the SBV wroteon its website.
The figures were released at a timewhen the public had begun to question why a handful of banks hadcontinued to post significant profits during difficult economic timeswhen production and business activity was stagnant.
The central bank attributed the profitability of some institutions totheir efforts to enhance the efficiency of their use of capital. Theseinstitutions expanded services related to money transfer, electronicpayment and foreign exchange, with total revenues from such servicesincreasing 15 percent last year over 2010.
However,the SBV admitted that the profitability of the banking system overallwas driven by a few banks with large-scale assets and capital and goodmanagement. The profits of many banks, they added, were whittled awaysignificantly by the need to establish provisional funds against risk.
The central bank said it was studying revision inregulations related to debt classification, provisional funds and riskmanagement to assist lending institution's to report profits moreexactly.
Meanwhile, increasing bad debt levels hadcontinued to weigh on the profits of the nation's lending institutions,and the margins between earnings and costs as of April 30 was "very low"and half the level of the industry at the same time last year, theState Bank said.
Two of the most important indicesreflecting a bank's financial health – return-on-assets (ROA) andreturn-on-equity (ROE) – were lower last year, the State Bank said.Industry-wide, ROA fell from 1.29 percent in 2010 to 1.09 percent lastyear, while ROE declined from 14.56 percent in 2010 to 11.86 percentlast year.
These figures lagged behind regional averages in Southeast Asia , where the ROE of banks remained at 14-15 percent.-VNA
Nearly half of all lending institutions saw their profits tumble in 2011, and over 10 percent of those suffered losses.
"Generally speaking, credit institutions' profitability last yearmatched the scale of their assets, ownership capital and managementcapacities, as well as the difficult economic conditions," the SBV wroteon its website.
The figures were released at a timewhen the public had begun to question why a handful of banks hadcontinued to post significant profits during difficult economic timeswhen production and business activity was stagnant.
The central bank attributed the profitability of some institutions totheir efforts to enhance the efficiency of their use of capital. Theseinstitutions expanded services related to money transfer, electronicpayment and foreign exchange, with total revenues from such servicesincreasing 15 percent last year over 2010.
However,the SBV admitted that the profitability of the banking system overallwas driven by a few banks with large-scale assets and capital and goodmanagement. The profits of many banks, they added, were whittled awaysignificantly by the need to establish provisional funds against risk.
The central bank said it was studying revision inregulations related to debt classification, provisional funds and riskmanagement to assist lending institution's to report profits moreexactly.
Meanwhile, increasing bad debt levels hadcontinued to weigh on the profits of the nation's lending institutions,and the margins between earnings and costs as of April 30 was "very low"and half the level of the industry at the same time last year, theState Bank said.
Two of the most important indicesreflecting a bank's financial health – return-on-assets (ROA) andreturn-on-equity (ROE) – were lower last year, the State Bank said.Industry-wide, ROA fell from 1.29 percent in 2010 to 1.09 percent lastyear, while ROE declined from 14.56 percent in 2010 to 11.86 percentlast year.
These figures lagged behind regional averages in Southeast Asia , where the ROE of banks remained at 14-15 percent.-VNA
