Vietnamese banks' 2018 pre-tax profit surges 40% as bad debt crackdown pays off

Lenders were able to resolve $6.5b in soured loans.

The Vietnamese banking sector closed the year on strong financial footing after overall profit before tax surged 40% YoYin 2018 as the banks’ intensified efforts to resolve bad debt paid off with double-digit earnings growth, according to local media reports.

Also read: Vietnamese banks step up bad loan disposal via auction

VIB’s profit skyrocketed 176% YoY to $74.8m (VND1.72t) in 2018 as it made steady headway in reducing the volume of its soured assets. Vietcombank’s pre-tax profits also soared 63% YoY to a record $782.6m (VND18t) as its non-performing loans (NPL) is ranked the lowest amongst local banks after accounting for only 0.97% of outstanding loans.

Similarly, TPBank was able to double its pre-tax earnings to $98.3m (VND2.26t) whilst Agbank made a pre-tax profit of $327.4m (VND7.53t).

Also read: Can the VAMC single-handedly halt Vietnam's bad loan woes?

The local banking system resolved nearly $6.5b (VND150t) in bad debt to drive down the bad debt ratio to 1.89% as per banks' balance sheets, extending a healthy decline from 1.99% in 2017 and 2.46% in 2016.

The intensified focus of the banking sector on the higher margin retail business also resulted in enhanced profitability for Vietnamese banks in 2018.