Vietnam’s Bad Debt Ratio Swells 21.5% in Jan-Jun: Financial Watchdog

Tuan Minh

10:13 06/09/2017

BizLIVE - Vietnam’s bad debts are still increasing as banks strongly inject more cash into the economy.

Vietnam’s Bad Debt Ratio Swells 21.5% in Jan-Jun: Financial Watchdog

Vietnam’s bad debts are still increasing. Photo: Internet

Non-performing loans (NPLs) at commercial banks in Vietnam were estimated at 157 trillion dong ($6.91 billion) as of June 30, 2017, up 21.5% from the end of 2016, the National Financial Supervisory, the government’s financial watchdog, has said in a report.
The NPLs accounted for 2.9% of total credit in the Vietnamese banking system at that time, higher than 2.6% reported for December 2016, the commission added.
These sour loans do not include those local credit institutions had sold to the central bank-run Vietnam Asset Management Company (VAMC).
The government said in a report in May that bad debts on banks’ balance sheets and trouble loans sold to VAMC made up 5.8% of total lending. If those loans that can potentially become NPLs, the ratio could amount to 10.08%.
In a move accelerate the cleanup of NPLs, the Vietnamese National Assembly, the country’s supreme legislative body, dictated a resolution in June, which allows banks and VAMC to repossess collateral.
“The ability to repossess collateral is a critical next step in resolving NPLs and we expect Resolution 42, which removes previous legal impediments, to help improve the rate of collateral repossession by banks and the VAMC,” Moody’s Investors Service said in a note last month.
Credit grew 11.5% in the first eight months of this year, faster than an expansion of 10.2% in the same period last year, the commission said.

TUAN MINH

Từ khóa: bad debt, VAMC, Moodys