A series of banks are facing towering bad debt provisions that ate up their profits for the first three quarters of the year, which had been promisingly reported.

Vietcombank, for instance, reported an additional VND2.9 trillion (US$133 million) of bad debts as of the end of September. The bank, as such, had a total of VND7.1 trillion (US$325.7 million) worth of bad debts for the first three quarters, up 24.6% on-year. The bank’s profit was much better compared to the same period in previous years. However, as the provision for bad debts added up, its profit fell significantly as a result.

Specifically, post-provision profit was reported at VND4.65 trillion (US$213.3 million), up only 11% on-year, while the pre-provision value was at a high of VND9.4 trillion (US$431.2 million), up 21.7% on-year. According to its consolidated financial report, Vietcombank’s nine-month credit growth was 10.2%, with mobilised deposits up 15.5% in comparison to the beginning of 2015.

Likewise, increased bad debt provisions also lowered the profit of Vietinbank. Despite the relatively low bad debt ratio of some 1%, the irrecoverable debt increased 29% during the third quarter only. Risk provision for the period, therefore, went up by 66%.

Vietinbank’s profit result for the first three quarter was held at a modest level, VND5.7 trillion (US$261.5 million), and VND4.46 trillion (US$204.6 million) in the bank’s pre-tax and after tax profits respectively, both up only 4.4% on-year.

Smaller-scale banks’ profit seemed to be more seriously affected by provisioning activities.

LienVietPost Bank met only 36% of its whole-year target of VND936 trillion (US$42.9 million) in its pre-tax profit, despite a 200% growth in net operating profit on-year. This was due to the soar of bad debt provisions, to a level of VND404 trillion (US$18.5 million), 15 times higher than the same period last year.

Similarly, Eximbank’s bad debt provisions climbed to VND332 million (US$15.23 million) from VND84 billion (US$3.85 million) of the same period last year, bringing its pre-tax profit down 61% on-quarter to VND110 billion (US$5 million). As a consequence, the cumulative profit ended at only VND677 billion (US$30.6 million), down 28% on-year.

According to Ho Chi Minh City Securities Company, Eximbank may fail to meet its targeted VND1 trillion (US$45.87 million) in pre-tax profit by the year-end. The bank, instead, may gain a mere VND800 billion (US$36.7 million) in pre-tax profit.

Sacombank is also expected to face similar problems in the near future. Although the bank reported promising pre-tax profit of VND2.14 trillion (US$98.16 million) for the first three quarters this year, its merge in October with Southern Bank-the holder of over VND4 trillion in bad debts-will considerably lower its future profit.

Admitting that the business’s effectiveness might be challenged in the next three years, Sacombank planned to only gain between VND1 trillion (US$45.87 million) and VND1.3 trillion (US$59.6 million) in pre-tax profit for the period from 2015 to 2017.

However, fine profits were seen by other banks, such as Military Bank, ACB, or Techombank, even after provisioning for bad debts. All of them already completed 70%-80% of the whole-year target, with VND2.26 trillion (US$103.7 million), VND1.1 trillion (US$50.46 million), and VND1.5 trillion (US$68.8 million) in pre-tax profit respectively.

Saying that higher profits were hard to expect at present, experts believed the sector’s outlook will be better in the future.

VIR