Vietcombank set for lower profit as lending slows

Vietcombank’s profits are set to decline for the first time since 2013 due to slower credit growth amid the Covid-19 pandemic, a brokerage forecast.

The country’s most profitable lender’s pre-tax profit could fall by 1.6 percent to VND22.75 trillion ($984 billion) this year after credit growth in the first nine months virtually halved year-on-year to 6.5 percent, RongViet Securities Corporation (VDSC) in Ho Chi Minh City said in a note.

Provision for bad debts in the period rose 25 percent to VND6 trillion as companies suspended business.

Its investment in securities resulted in a loss of VND14.5 billion as against a profit of VND116.5 billion last year.

RongViet forecast 16 percent growth in pre-tax profit next year at VND26.37 trillion if the pandemic is under control by then.

The bank signed an exclusive bancassurance deal with insurance firm FWD, which will give it $400 million in prepaid fees for the next five years.

That will help increase the bank’s top line this quarter by 23 percent year-on-year, the brokerage said.