Vietcombank (VCB) posted nearly VND3.8 trillion (US$205.4 million) in pre-tax profit in the first nine months of this year, about 12 per cent higher than the target set for the entire year, the bank announced in its third-quarter earnings report.

Pre-tax profits in the third quarter alone reached about VND1.38 trillion ($74.6 million), up 116 per cent compared to the same quarter in 2008. At the end of the quarter, the bank had deposits of VND160 trillion ($8.6 billion) and outstanding loans of VND137 trillion ($7.4 billion).

Vietcombank chairman Nguyen Hoa Binh attributed the success to the improved quality of credit this year and the allocation of less capital to the establishment of provisional risk management funds, which erased large portions of last year’s profits.

"Our profit target for this year is not high, but we still need to be cautious," Binh added, noting that difficulties were still facing the banking industry. While earnings from credit activities accounted for only about half of Vietcombank’s total earnings, and the shrinking margin between deposit and lending interest rates was putting significant pressure on banks, he said.

As the State Bank of Viet Nam (SBV) was holding the line on the prime rate as well as compulsory reserve requirements during the rest of the year, banks were likely to face difficulties raising capital, Binh said.

"In addition to savings, the market may now have many other investment channels which offer greater profitability."

Vietcombank’s outstanding loans have risen about 24 per cent so far this year, nearing the 25-per-cent growth limit set by the SBV. Binh said the bank was asking the central bank for permission to allow credit to grow by 28 per cent, as it planned to implement some food and petroleum export credit programmes.

Vietcombank was last week awarded the title of Best Vietnamese Bank 2009 by Asiamoney magazine. The bank’s shares yesterday closed up 1.96 per cent to VND52,000 ($2.8) per share on the HCM City Stock Exchange.

The bank was still working on finding foreign strategic partners but was unlikely to this year, said Binh.