Banks report high profits but scary

Half year has gone with worrying business environment. However banks still report high profit for half year despite macroeconomic difficulties.

Basically banks profits are from making loans, investments, service charges, leasing etc...

Banks are still making loans to companies. But, in theory, in order to avoid insolvency or bankruptcy, banks have to set aside some money called as "provisions". According to Vietnamese Accounting Standard (VAS), Which clients, how much to make provisions largely depend on the clients' past debt-payment history. The VAS does not take into consideration the company potential/future performance. It means that a company, which is going to face a huge difficuty in operation in the near future but still manages to pay all the principals and interests, will still be put into "good condition" category.

However, the International Accounting Standard (IAS) requires banks to evaluate their clients and make provisions based on both the past performance and the future prospect. That's why the provision amount according to IAS is always higher than VAS.

So at difficult times, banks still making loans, still classifying clients into "good" category when, in fact, they should be in "bad" or at least "noticable" ones.

Abt income from service charges. There has been too much talking abt additional unreasonable charge without much prior notice to the customers. (ACB as the case as they charge extra fees when making currency exchange). Profit is the prime target, but it should be reasonable and acceptable.

Abt making investment, again, a question is being raised: "whether banks are making the right amount of provision for their investments" (high provision would mean financial safety for the bank but reduce profit). And are these investments being evaluated rightly ?

ACB will probably top the "making profits" competition between banks. But recently they are so notorious for "frauds" at their gold exchange, extra fees ...

And remember the half year figures coming out without an auditor's certification.