Vietcombank set for lower profit as lending slows
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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.
Questions & Answers
Q.Why are Vietcombank's profits expected to fall for the first time since 2013?
Why are Vietcombank's profits expected to fall for the first time since 2013?
Profits are set to decline due to slower credit growth caused by the Covid-19 pandemic. Credit growth in the first nine months nearly halved compared to last year, contributing to the projected decrease.
Q.How much is Vietcombank's pre-tax profit forecast to be this year, and what was its securities investment performance?
How much is Vietcombank's pre-tax profit forecast to be this year, and what was its securities investment performance?
Vietcombank's pre-tax profit is forecast to be VND22.75 trillion ($984 billion) this year. Its investment in securities resulted in a loss of VND14.5 billion, a decrease from a VND116.5 billion profit last year.
Q.What is the forecast for Vietcombank's pre-tax profit next year?
What is the forecast for Vietcombank's pre-tax profit next year?
RongViet forecasts a 16 percent growth in pre-tax profit next year, reaching VND26.37 trillion. This projection is contingent on the pandemic being brought under control by then.
Q.How will the bancassurance deal with FWD impact Vietcombank's revenue?
How will the bancassurance deal with FWD impact Vietcombank's revenue?
The exclusive bancassurance deal with FWD will provide Vietcombank with $400 million in prepaid fees over five years. This arrangement is expected to increase the bank’s top line by 23 percent year-on-year this quarter.
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