A Maritime Bank transaction office. Increasing provisions are likely to slash the bank's profits this year. — Photo saigondautu.com.vn

HA NOI (Biz Hub) — Increasing provisional funds to support credit risks will significantly slash Maritime Bank's profits this year, the bank's General Director Ta Ngoc Da, stated at a shareholders meeting on May 28.

The bank projected a pre-tax profit of about VND1.11 trillion (US$52.86 million) for 2015, up 13 per cent year-on-year. But, as bad debt resolution requires more provisions, the practical pre-tax profit will only reach some VND165 billion ($7.86 million), almost equalling last year's figure.

Da noted that the profit was whittled away by nearly 60 per cent during 2014, when provisions soared by 220 per cent year-on-year to VND722.5 billion ($34.40 million). This helped the bank control its bad debts at 2.61 per cent of all outstanding loans.

Maritime plans to maintain the bad debt ratio below 3 per cent this year, with 17 per cent deposit growth and 6.8 per cent lending growth. Deposits at the bank totalled VND66.87 trillion ($3.18 billion) and loans reached a combined VND39.35 trillion ($1.87 billion) last year.

Da said the merger of his bank and Mekong Development Bank, which had been approved by the State Bank of Viet Nam in March, will be completed in the second quarter.

The banks announced earlier this year that the new institution will be named Maritime Bank, with a charter capital of VND11.75 trillion ($560 million) and total assets of VND113 trillion ($5.38 billion).

They expect that following the merger, they will be counted among the largest banks in the country in terms of charter capital and transaction network. The merger is also expected to help support national banking reforms.

Da also affirmed that Maritime will acquire Textile and Garment Finance JSC, an affiliate of the Viet Nam National Textile and Garment Group, in the first half of the year. The acquisition will turn this firm into a consumer finance company. — VNS