Several domestic banks have posted positive earnings for the first half of the year and are confident of hitting their profit targets for the year.

HCM Stock Exchange-listed Sacombank, with total assets of 140 trillion VND (6.7 billion USD) as of June 30, posted a profit of over 1.5 trillion VND (72.78 million USD) for the period, representing 56 percent of the year's target. About 83 percent of profits were attributed to interest income on loans.

Sacombank general director Tran Xuan Huy vowed that Sacombank would be able to achieve and even exceed its profit target of 2.7 trillion VND (131 million USD) by the end of the year.

However, Vietcombank chairman Nguyen Hoa Binh said, "It's rather soon and risky to say anything about business results for the whole year." Vietcombank posted a 3 trillion VND (145.56 million USD) profit in the first six months out of the year, against a target of 5.65 trillion VND (274.19 million USD) for the year.

DongA Bank posted a profit of 675 billion VND (32.75 million USD) during the period, putting it on course to meet its target for the year and to pay a planned dividend of 15 percent. General Director Tran Phuong Binh also said that the credit growth of many banks remained well below the credit growth cap for the year, giving them room to expand business in the coming months.

However, An Binh Bank fell behind the pace it needed to maintain to meet its target, announcing a profit of 307.6 billion VND (14.92 million USD) in the first six months, an amount only a little over 46 percent of the year's target. General director Tran Thanh Hoa cautioned that banks needed to improve early forecasting and risk management to counter potential challenges in the tough months ahead.

During a difficult time for the economy, the return-on-equity (ROE) in the banking industry was much higher than in other sectors, said economist Le Tham Duong.

"The story of what banks do to share risks with enterprises should be discussed more seriously," Duong said. "Regulators must ensure economic policies benefit all entities in the economy, rather than grant privileges to the banking sector."

"Banks get many benefits from economic policy." said another HCM City-based economist who asked to remain anonymous. "The deposit interest rate cap, for example, is creating favourable conditions for banks to buy low and sell high."

Deposit interest rates are currently capped at 14 percent while lending interest rate are freely floating at around 19-20 percent./.