Hanoi (VNA) -In the third quarter of 2016, Kienlongbank’s gross profit decreased by nearly12 percent.

As a result, in thefirst nine months of the year Kienlongbank’s pre-tax profits were worth only 19.8billion VND (880,000).

The bank managementattributed the profit drop to increasing operation costs and risk provision forbad debts.

The lender’s bad debtsratio increased from 1.12 per cent at the beginning of the year to 1.46 percent. Significantly, irrecoverable debts increased by 54 per cent to 187billion VND (8.3 million USD).

Kienlongbank will thusfind it difficult to achieve the year’s pre-tax profit target of 300 billionVND (13.3 million USD).

Eximbank, quicklyrecognising the difficult business situation, has tweaked its business plans.

By late second quarterthe bank’s bad debts had increased sharply to 5.3 per cent despite the fact itscredit growth rate was minus 4.62 per cent.

Consequently, its firsthalf pre-tax profit was only 80 billion VND.

In the first nine monthsof the year Eximbank had a pre-tax profit of 202 billion VND but an after-taxloss of 43 billion VND.

Its bad debts were 3.35per cent of total outstanding loans.

In the face of thedownbeat situation, Eximbank’s executive board slashed the full-year profittarget by 44 per cent to 400 billion VND.

State giant BIDV had tomake risk provision of nearly 7 trillion VND in the first nine months of 2016,an 80 per cent rise over the same period last year.

According to the HCMCity Banking University, in 2016 the banking sector had to set aside 91.374trillion VND as bad debts provisions, much higher than the 74.828 trillion VND in2015 and 59.287 trillion VND in 2014.

Of this figure,provision for bad debts amounted to 53.098 trillion VND, and bonds issued bythe Vietnam Asset Management Company against bad debts were worth 38.276trillion VND.

These ate into theprofits of banks, including major ones, and as a result shareholders did notget dividends.-VNA