Vietcombank Q1 Profit Up 9% but Provisions Surge 7x; Banking Sector Diverges

Overview

Vietcombank (VCB) and VietinBank (CTG) both surpassed VND 10,000B in Q1 2026 pre-tax profit, but their earnings trajectories diverged sharply. VCB’s profit rose only 9% as provision expenses multiplied sevenfold, while CTG’s profit surged 63% on lower credit costs. The results underscore growing divergence in asset quality among Vietnam’s top lenders.

Key Facts

• Vietcombank (VCB) Q1 2026 pre-tax profit: VND 11,803B, up 9% YoY.
• VCB’s net interest income rose 29% to VND 17,651B, but provision costs surged 7x to VND 2,493B.
• VCB’s total bad debt increased 12% to VND 10,868B; doubtful debts (Group 4) jumped 7x from year-end 2025.
• VietinBank (CTG) Q1 pre-tax profit: VND 11,139B, up 63% YoY.
• CTG’s provision costs fell 5% to VND 7,700B, while total bad debt declined 6% to VND 20,598B.
• MB reported Q1 profit of VND 9,628B, Techcombank VND 8,870B, and BIDV VND 8,572B.
• VPBank profit rose 58% to VND 7,921B; ABBank profit nearly quadrupled to VND 1,500B.

What Happened

Vietcombank’s Q1 2026 earnings, released in its financial statement, showed a 9% increase in pre-tax profit to VND 11,803B, driven by a 29% rise in net interest income. However, the bank aggressively boosted credit risk provisions to VND 2,493B, seven times higher than the same period last year, reflecting mounting asset quality concerns. Total non-performing loans (NPLs) rose 12% to VND 10,868B, with 76% classified as loss loans (Group 5). Doubtful debts (Group 4) surged sevenfold from the start of the year, though the overall NPL ratio remained low at 0.62%.

In contrast, VietinBank reported a 63% jump in pre-tax profit to VND 11,139B, supported by a 25% increase in net interest income and strong non-interest income from forex and investment securities. The bank reduced its provision expenses by 5% to VND 7,700B, while total bad debt fell 6% to VND 20,598B, improving the NPL ratio from 1.1% to 1.02%. Among mid-tier banks, ABBank posted a near-fourfold profit surge to VND 1,500B, driven by a 136% rise in total operating income, though provisions also increased 151%.

Market Context

VCB closed at VND 60,000 on April 15, 2026, up 1.01% on volume of 8.5 million shares on HOSE. CTG closed flat at VND 35,000 on volume of 4.9 million shares. The banking sector has been under scrutiny as credit growth accelerates but asset quality pressures emerge. VCB’s elevated provisioning contrasts with CTG’s improving metrics, highlighting divergent credit cycles even among state-owned banks. The broader VN-Index has been supported by strong Q1 GDP growth, but rising NPLs at some lenders could temper sentiment.

Strategic Significance

Vietcombank’s decision to front-load provisions suggests a conservative approach to cleaning up its balance sheet, potentially positioning it for stronger earnings in subsequent quarters. However, the surge in doubtful debts warrants close monitoring. VietinBank’s ability to grow profit while reducing provisions signals better underlying asset quality and operational efficiency. For long-term investors, the divergence underscores the importance of bank-specific credit risk management, especially as the SBV maintains a loose monetary policy. The strong performance of mid-tier banks like VPBank and ABBank indicates that smaller lenders may be gaining market share in retail and SME lending.

What to Watch

• Q2 2026 provision trends at VCB: whether the elevated provisioning persists or moderates.
• CTG’s NPL ratio trajectory: continued improvement could support further margin expansion.
• SBV’s credit growth target for 2026 and any changes to reserve requirements.
• Foreign ownership limits: potential increase for certain banks could drive inflows.
• ABBank’s asset quality: rapid loan growth may lead to higher NPLs in coming quarters.