Vietnam’s Bad Debt Swells to 2.78% in May: SBV

Tuan Minh

11:45 03/08/2016

BizLIVE - The bad debt ratio in the Vietnamese banking system reached 2.78% in May this year, rising from 2.62% in March.

Vietnam’s Bad Debt Swells to 2.78% in May: SBV

SBV Deputy Governor Nguyen Thi Hong (second right) participated in a EuroCham-held dialogue in September 9, 2015. Photo:

Non-performing loans (NPLs) accounted for 2.78% of total credit of banks operating in Vietnam as of the end of May 2016, said Deputy Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong late on Tuesday.
The figure is higher than 2.62% in March and 2.55% in December 2015 while credit growth accelerated to 8.16% in the first half of this year, data of the central bank showed.
The ratio is still below the 3% threshold that the banking regulator has set for the local banking system, Hong noted, adding that bad debt handling will continue to be a major task for the bank from in the latter half of this year.
A number of local banks have reported increases in their bad debt for the first six months of this year.
Bank for Investment and Development of Vietnam (BIDV), the largest lender by assets in the country currently, said its bad debt ratio climbed to 2% as of June 2016, from 1.6% six months earlier.
Vietnam Export Import Commercial Bank (Eximbank) saw a sharp rise in NPLs, reaching 5.3% of total lending at the end of June 2016, compared to 1.83% in December 2015.
The swelling of bad debt can be attributed to the Vietnam Asset Management Company (VAMC)’s slower pace of buying troubled loans and banks’ stricter asset classification.
According to a government report read by Prime Minister Nguyen Xuan Phuc at the first sitting of the 14th National Assembly last week, the SBV-run VAMC had purchased 241 trillion dong ($10.8 billion) worth of NPLs as of June this year.
This figure showed that VAMC acquired few NLPs from local credit institutions in the first half of this year.
The firm, established in July 2013, has slowed down its bad debt purchase after helping bring down the overall NPL ratio to below 3% last year and is focusing on solving the toxic loans now under its management.
It has recoup $1.45 billion, or 13.4% of total NPLs it has purchased so far, according to the government report.