Sacombank expects its pre-tax profit for the second quarter of 2026 to reach between VND 1.9 trillion and VND 2.0 trillion (USD 73–77 million), down nearly 50% from the same period last year. The lender said legacy bad debts linked to the former Trầm Bê group, together with rising funding costs and intense competition for deposits, remain the main factors weighing on earnings.

Resolving legacy issues

In his first message as Chief Executive Officer, Loic Faussier said: "I fully recognize that Sacombank is entering a challenging period, as the bank must both resolve issues inherited from the past and build a foundation for future development."

Sacombank remains in the middle of a long-term restructuring program, focused primarily on resolving legacy non-performing loans associated with the former Trầm Bê group. According to the bank, second-quarter 2026 pre-tax profit, after provisioning expenses, is expected to range between VND 1.9 trillion and VND 2.0 trillion (USD 73–77 million), representing a decline of nearly 50% year-on-year. The final figure is still being calculated and will be officially announced in the bank's financial statements.

Sacombank said the decline in profit was mainly driven by higher funding costs, increasingly intense competition for deposits and the remaining pressures of its restructuring process.

Against this backdrop, Loic Faussier stressed that Sacombank would prioritize strengthening its operational foundations rather than pursuing growth at any cost. The bank will focus on improving risk management, enhancing asset quality, accelerating digital transformation, improving customer experience and strengthening corporate governance in line with international standards.

His message suggests Sacombank will require additional time to complete its restructuring plan, particularly in addressing its long-standing stock of non-performing loans.

At the bank's 2026 annual general meeting in April, the Board of Directors submitted a proposal to extend the post-merger restructuring plan through 2030.

According to the board, Sacombank has concentrated on recovering bad debts, resolving collateral, addressing issues identified by regulatory inspections and gradually restructuring its business operations while strengthening risk controls and improving its financial position.

Those efforts have produced measurable progress in managing risks and resolving operational weaknesses.

However, several objectives remain behind schedule, largely because recovering bad debts and liquidating collateral depend on lengthy legal procedures. Some collateral assets involve particularly complex legal issues, requiring additional time to complete the necessary processes.

Breaking down the profit decline

If second-quarter pre-tax profit falls by nearly 50% as expected, it would mark Sacombank's weakest quarterly pre-tax earnings since the fourth quarter of 2022, excluding the fourth quarter of 2025, when the bank reported a pre-tax loss of VND 3.392 trillion (USD 130 million).

Regarding the weaker-than-expected performance, Sacombank cited higher funding costs, fierce competition for deposits and continued restructuring pressures. These challenges have affected Vietnam's banking industry since the beginning of 2026 as deposit interest rates have risen.

For Sacombank specifically, the bank's first-quarter 2026 financial statements showed that interest expenses on customer deposits and borrowings increased by VND 2.3303 trillion (USD 89 million) compared with the same period last year.

Customer deposits and debt securities issued increased by VND 80.183 trillion (approximately USD 3.07 billion), resulting in an additional VND 2.1329 trillion (approximately USD 82 million) in interest expenses.

Meanwhile, borrowings from the State Bank of Vietnam and other credit institutions rose by VND 15.636 trillion (approximately USD 599 million), increasing interest expenses by VND 198.7 billion (USD 7.6 million) year-on-year. These higher funding costs eroded profitability, causing first-quarter 2026 net profit to fall to VND 1.529 trillion (USD 58.6 million), down VND 1.299 trillion (USD 49.8 million) from a year earlier.

In the first quarter, Sacombank also recorded a decline of VND 820.5 billion (USD 31.5 million) in net interest income compared with the first quarter of 2025. Although interest income and several other revenue streams increased, the bank's other operating expenses rose by VND 1.0388 trillion (USD 39.8 million).

Notably, credit risk provisioning expenses increased by VND 1.7883 trillion (USD 68.5 million), while operating expenses fell by VND 493 billion (USD 18.9 million) and corporate income tax expenses declined by VND 256.5 billion (USD 9.8 million).

Sacombank has yet to publish its second-quarter 2026 financial statements. However, given the bank's guidance on lower earnings and broader market developments since the beginning of the year, higher funding costs and elevated credit risk provisioning are expected to remain the primary drivers behind the decline in profit.

Tuan Nguyen