Vietnamese Banks Post Heftier Profits as Bad Debt Cleanup Quickens

Tuan Minh

19:53 13/10/2017

BizLIVE - The Vietnamese banking system has recorded better performance and is seemingly its credibility in the local economy.

Vietnamese Banks Post Heftier Profits as Bad Debt Cleanup Quickens

Banks in Vietnam are reporting bigger profits. Photo: Internet

Credit institutions in Vietnam reported a combined profit of 47 trillion dong ($2.07 billion) in the first three quarters this year, soaring 39% from a year earlier, as credit growth gained momentum, the government’s financial watchdog has said in a monthly report.
Operating profits from lending activities increased 15.8% and profits before provisions for credit risks grew 30.2% in the nine-month period from a year earlier, said the National Financial Supervisory Commission.
The net interest margin (NIM), a measure of profitability, improved slightly to 2.8% from 2.7% in the comparable period in 2016, it added.
Total outstanding loans in the local banking system expanded 11.5% between January and September. Of the sum, lending in the Vietnamese dong accounted for 91.65%. Notably, credit in foreign currency rose 12.9% year-on-year, compared to a 5.4% increase a year earlier.
The commission added that the bad debt ratio has climbed to 2.9% currently, compared to 2.6% in 2016, with the majority lying at weak and poorly-managed banks.
In the first seven months of this year, banks resolved an estimated 45 trillion dong ($1.98 billion) worth of non-performing loans.
One third of the amount came from clients’ payments, one third was through sales of trouble loans to the state-run Vietnam Asset Management Company, and the rest through provisions for credit risks and foreclosure of mortgage.
Local banks also set aside around 110 trillion dong ($4.84 billion) for reserve fund to handle bad debts, up 22% from end-2016, the commission said.