The bad debt ratio of some commercial banks
The Q3 finance reports released by 13 commercial banks showed that 12 banks have the bad debt ratios at below 3 percent as requested by the State Bank (SBV). The 13th bank, SaigonBank, did not reveal how much its bad debt was.
he total bad debt ratio had reduced to VND36.19 trillion by September 30. However, the fifth-group debt, or the worst, irrecoverable debt, had increased sharply. The 12 banks reported a 28.17 percent increase in irrecoverable debt in comparison with the end of 2015.
The irrecoverable debts at BIDV, Vietcombank and VietinBank – the nation’s three leading banks – were the highest. BIDV’s debts have increased by 72.36 percent compared with the end of the last year to VND5.631 trillion, while Vietcombank by 38.28 percent to VND4.938 trillion and VietinBank by 28.78 percent to VND2.685 trillion.
As such, BIDV is the bank with the highest irrecoverable debt which is even higher than the chartered capital of 20 small banks. The bank reported very high credit growth rate of 23.74 percent in the first nine months of the year. This helped reduce the bad debt ratio of the bank. If not, the bad debt ratio would have been higher than the reported 2.16 percent.
Meanwhile, VP Bank, a joint stock bank, witnessed the sharpest increase in the fifth-group debt – 202.91 percent. Some other banks which also have sharp irrecoverable debt increases include Sacombank – 78.43 percent and VND1.795 trillion, and VIB – 51.44 percent and VND789 billion.
Analysts commented that the easy conditions set by commercial banks when providing loans are the major reason which has increased the fifth-group debt.
However, some other banks seem to ‘go against the trend’. They are Military Bank (MB), ACB and Eximbank which have seen irrecoverable debts decreasing significantly. MB’s debts have decreased by 22 percent, ACB 36 percent and Eximbank 43.6 percent. Meanwhile, MB and ACB are banks which have set very strict requirements on borrowers.
The Financial Times has reported that the bad debts at Vietnam’s banks seem to be worse than official figures suggested.
An SBV’s official report showed that the nonperforming loans had reduced to 2.9 percent by September, a significant decrease from 4.2 percent at the same period of the last year.
The establishment of the Vietnam Asset Management Company (VAMC) is believed to play a very important role in restructuring bad debts in the banking sector. By October 25, VAMC had bought VND226.028 trillion worth of bad debts from 30 credit institutions at VND191.806 trillion.