Saturday, March 3, 2012

A paradox


Profit of banks in 2011 was announced to be high, and higher than 2010. Vietcombank earned 5,700 billion VND before tax (about £163,000,000), increase by 4%. EBIT of Vietinbank is 8,105 billion VND (≈£231,500,00), and of Eximbank is 4,065 billion VND (≈£11,600,000).
Source : The Saigon Times 
50,000 enterprises were bankrupt or stopped operating in 2011, most of them are small and medium, accounts for 5% of the total. Many causes, but generally the high interest rate (19-23%) in a long period was the sharpest blade.
Comparing the number, banks earned huge profit while firms gained loss or breakeven. Assume that profit is on top, profit is now belongs to a small number of bankers. General speaking, profit of banks come from lending to firms. If firms no longer exist and cannot pay the loans, how long can banks survive?  

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