Vietcombank, Vietnam's top lender by market value, said it expects a solid expansion in lending this year but forecast flat profits as it makes more provisions for underperforming loans under new central bank rules.
The Hanoi-based bank, 15 percent owned by Japan's Mizuho Corporate Bank, estimated pretax profit at 5.9 trillion dong ($274 million), up just 0.4 percent from last year.
Vietnamese lenders are factoring in higher provisions due to a central bank ruling on tougher bad debt classification, known as Circular 2, which takes effect this month.
"Our gross profits would likely climb 11 percent if we didn't factor in higher provisions but due to Circular 2, we need to and we want to be on the safe side," Le Hoang Tung, head of the Secretary of the Board department, told Reuters.
"But that's the target. Actual profit may be higher thanks to solid credit growth," he said.
The bank aims to expand lending by 13 percent and lift its assets by 11.5 percent this year.
The estimates were submitted in a statement to a shareholders' meeting on Friday.
The statement also said the bank plans to proceed with merger opportunities although merger partners or acquisition targets were not named.
A potential merger with unlisted Saigon Bank for Industry and Trade was, however, flagged by the central bank in a briefing note this year.
It may be one of six to eight mergers in the country's banking sector this year, the State Bank of Vietnam said in the note - part of efforts to clean up the country's fragmented banking sector of more than 40 domestic lenders, many of which are weighed down with bad loans after a decade of rapid expansion.
Vietcombank said it plans to keep bad debts this year at below 2.5 percent of total loans, compared to 2.3 percent in 2014. Shares in the bank ended Friday morning's session up 0.3 percent at 37,100 dong.