HA NOI (VNS) — Sacombank's (STB) profit last year declined due to large provisions, mainly for its subsidiary Sacombank Securities (SBS), the bank said yesterday during its shareholder meeting.

Last year's net profit reached VND987.4 billion (US$47 million), around 52 per cent less than in 2011.

Sacombank announced that SBS owed over VND2 trillion ($95.2 million) to the bank as of last June.

This was because the bank bought SBS's convertible bonds, which had not been approved by the central bank. At the same time, Sacombank also violated the regulation prohibiting banks from lending to securities companies under their control.

Sacombank's losses totaled VND821 billion ($39 million), according to the central bank.

Last year, Sacombank made provisions for SBS of more than VND1 trillion ($47.6 million). It managed to recover VND300 billion ($14.2 million) in convertible bonds and VND104 billion ($4.9million) in share interest.

This year, the bank may have to add VND122 billion ($5.8 million) to provisions for SBS.

SBS shares were delisted on March 23, as losses were higher than charter capital. The brokerage will either restructure or face dissolution.

Sacombank said it would not determine whether SBS merged with another brokerage, as Sacombank owned only a small percentage of the securities firm.

The bank said it expected to make about VND3.2 trillion in profits this year, more than double last year's level. During the first quarter, it earned a gross profit of VND50 billion.

It also aims to increase charter capital by 53 per cent to VND16.4 trillion this year. — VNS