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Banks hand out pink slips as profits fall

Update: February, 24/2014 - 08:36
Photo laisuatnganhang

Compiled by Le Hung Vong

Many major banks have announced a fall in profits for both last quarter and last year, leading to payroll cuts to reduce costs.

Tuoi Tre (Youth) newspaper reported that Eximbank earned pre-tax profits of VND827 billion ($37.59 million), a steep fall from VND2.851 trillion in 2012.

ACB reported losses of nearly VND293 billion in the fourth quarter due to a 45 per cent fall in interest earnings and a loss of VND34 billion from gold and foreign currency trading.

Sacombank saw a year-on-year decrease of nearly VND212.2 billion ($9.64 million) in Q4 profits due to lower interest earnings. Phan Huy Khang, the bank's general director, said 85 per cent of revenues in the banking industry comes from loan interest.

Nguyen Duy Phong of Ban Viet Securities Co said the decline in profits was foreseen since costs remained high while income from loan interest fell sharply. He added that bad debts would continue to eat into banks' profits.

According to economist Nguyen Chi Hieu, banks are facing the consequences of rapid development in previous years. He said the sector's growth rate had been three to four times that of GDP as against a "suitable" level of two times.

They had been locked in a race to recruit employees and open branches, and are still counting the costs, he said.

As profits fell, they began to shed workers to reduce costs.

In the fourth quarter of last year, Eximbank laid off 340 people, three times as many as it had sacked in the previous nine months.

In the same period ACB laid off 217 people.The bank sacked 17 per cent of its total staff last year.

Hieu said: "Profits earned by the banking sector could indicate a country's economic strength. [But] when businesses face difficulties, banks must reduce their profits…"

Huynh Anh Tuan, general director of SJC Securities Co, said the situation would become clearer from June 1 when Circular No 2 on asset classification, risk provisioning, and use of provisions against credit risks takes effect.

He said banks' profits would be further affected when bad debts are reported more clearly, but then the Asset Management Company would have more favourable conditions to operate and help ease the difficulties facing banks.

Property revival

With the property market showing signs of stirring to life, developers in HCM City are planning to put apartments for sale this year.

Phu My Hung Corporation said it would put offer its Green Valley project for sale in the first quarter. It comprises four blocks of 20-27 floors with 546 units measuring 88-194sq.m.

Also in District 7, The Park Residence on Nguyen Huu Tho Street has hit the market with around 1,000 apartments of 52-73 square metres each at a price of VND700 million ($33,175) per unit.

The developer has begun to accept bookings and construction is scheduled to be finished in 2016.

In District 6, Him Lam Land Company is set to sell around 1,400 apartments in its Him Lam - Cho Lon project, which is almost finished.

A clutch of other apartment projects have also hit the market — Lexington Residence in District 2 at around VND20.6 million per square metre, PARCSpring also in District 2 at VND17.4 million, Sunview Town in Thu Duc District at VND11.2 million, and An Phu 2 in District 8 at VND16.8 million.

According to Cushman & Wakefield, apartment sales were up last quarter, mainly in the budget segment and with prices of around VND15 million per square metre.

The property consultancy said prices would possibly continue to fall this year.

Developers said they would build apartments only on sites they already own and would no longer spread their investments too thin unlike in the past.

Statistics from the city Department of Construction show that around 5,000 out of the apartment inventory of nearly 14,500 units found buyers last year.

According to market observers, the market will continue to favour buyers this year, with finished projects being be more attractive to customers than those under construction.

HCM City hydrofoil ban

Dozens of employees work-ing for companies operating hydrofoil services between HCM City and Vung Tau have lost their jobs following the suspension of services pending safety inspections after a fire broke out on a vessel in January.

The inspections were completed on January 25 but there is no word yet about when the ban will be lifted.

Greenlines Express has sacked half of its employees while the figures are not known for the other operators, Vina Express and Petro Express.

The three are registered to operate 21 hydrofoils on the HCM City – Vung Tau route though they actually operate only nine.

Many of the dismissed employees rued their misfortune while the operators said they do not have the money to pay their salaries.

Greenlines, the biggest operator, was the first to announce its decision to lay off workers.

Thanh, a Greenlines employee, broke into tears when told about his dismissal, unhappy and fearful that it will be very difficult to get a new job in the current economic situation.

Trinh Thanh Chuong, general director of Greenlines, told Sai Gon Tiep Thi (Sai Gon Marketing) newspaper that the inspection of his company's hydrofoils and repairs have been completed, but the suspension is yet to be lifted.

Chuong said the staff dismissals caused by the month-long suspension made him broken-hearted.

He said hydrofoils that meet safety standards should be allowed to operate again, warning that a continuing ban would leave the operators bankrupt and their workers jobless.

Tat Thanh Cang, director of the city Department of Transport said at the time of the ban on January 21: "Vessels in good condition will be allowed to continue their operations while those not in good condition will face permanent suspension."

The department said the suspension affects passengers who now have to travel by land instead.

The city People's Committee slapped the ban the day after a fire broke out aboard a hydrofoil carrying 85 passengers to Vung Tau on January 20.

The captain of the Vina Express vessel tried to control the hydrofoil and steer it to a bank of the Sai Gon River in District 7.

The accident forced the passengers to jump into the water to escape from the fire. Luckily, they were all rescued by passing ships and rescue teams.

An inspection team revealed last week that all hydrofoils operating in HCM City have been deemed old and in bad condition and pose a threat to passengers' safety.

All nine have been in operation for more than 20 years, their hulls are in "extremely bad condition," and they have many other technical problems in addition, inspectors said. — VNS

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