Vietcombank profit plunges

The pretax profit of state-owned lender Vietcombank in the third quarter fell over 20 percent to VND4.9 trillion ($210.9 million) over pandemic impacts.

The bank said that provision for bad debt, which rose 35 percent year-on-year to VND2.02 trillion, and lower net interest income were the main reasons for the profit slump.

Although the bank remains the most profitable lender in the country, its bad debt increased 15 percent in the first nine months to nearly VND7.9 trillion.

Rising bad debt has become a major concern for Vietnamese lenders this year as the Covid-19 pandemic crippled key industries. With businesses finding it very difficult or impossible to repay loans, banks are forced to increase their bad debt provisions.

Banks have lowered deposit interest rates from 7 percent earlier this year to 5.8 percent after the State Bank of Vietnam cut policy rates four times, seeking to boost lending to revive the economy, which has posted decade-low growth in the second and third quarters.

Vietcombank, the fourth-largest lender in Vietnam in terms of assets, also reported that its Q3 revenue fell to near 4 percent year-on-year to VND11.6 trillion.

The research unit of top brokerage SSI Securities Corporation has recently forecast that the bank’s pretax profit is set to fall by over 13 percent year-on-year to VND20 trillion due to Covid-19 impacts.

The State Bank of Vietnam in April ordered state-owned lenders to cut profits by 30-40 percent this year to lower lending rates and support economic recovery.