Banks’ Charter Capitals Surged 63% since 2011

Diep Nguyen

11:34 22/05/2019

BizLIVE -

Credit quality has been improved. The bad debt tackling solutions have been launched together with the bad debt control, all those help to prevent new bad debt, improve credit quality and reduce the general bad debt rates of the credit institutions.

Banks’ Charter Capitals Surged 63% since 2011
The State Bank of Vietnam (SBV) just submitted a report to the Assembly on the launching of Decree 113/2015/QH13 and other decrees on the restructuring of the credit institutions and banks. SBV ordered the credit institutions to complete the restructuring process, attached with the bad debt tackling.
So far, SBV has basically approved the restructuring process of most credit institutions. Accordingly, some credit institutions have not been approved mainly are private commercial banks that are waiting to merge, the credit institions that are under screening and some weak credit institutions that are under review for specific plans.
SBV announced that the restrusturing processes in some credit instituions have gained remarkable successes, in line with the targets and process set out by SBV, this has helped to ensure the stability, safety for the system in many respects.
Firstly, the financial capability of credit institutions has been strengthened, the charter capital has been raised steadily over years. At the end of 2018, SBV estimated that the banks’ charter capital has increased by 63.5% compared to 2011.
The application of Basel II has been actively done to meet the international standards and capital safety. So far, there have been 7 state owned and private commercial banks have been approved by SBV to meet the Basel II including Vietcombank, VIB, OCB, MB, VPBank, TPBank and ACB.
Secondly, the credit quality has been improved. The bad debt tackling solutions have been launched together with the bad debt control, all those help to prevent new bad debt, improve credit quality and reduce the general bad debt rates of the credit institutions. 
Apart from that, the Decree 42 has created favorable conditions for bad debt tackling and contrain the bad debt rate at less than 3%, by the end of March 2019, the bad debt rate is 2.02%.
Thirdly, the credit institution scale has expanded. By the end of March 2019, total assets of the credit institution reached more than VND 11 million billion, an increase of 0.8% compared to the end of 2018, the total capital mobilization from the market reached VND 8.5 million billion, recording growth rate of 2.5% compared to 2018. 
The better credit to the market and the low interest rate environment has helped companies to maintain and develop businesses and support the general economy.

DIEP NGUYEN

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