BizLIVE - The bad debt ratio has slipped from the end of 2016.
Vietnam’s Real Bad Debt Dwindles to 8.61%: SBV Governor
Governor of the State Bank of Vietnam Le Minh Hung. Photo: VnEconomy
Non-performing loans (NPLs) in the Vietnamese banking system, if fully calculated, are estimated at 566 trillion dong ($24.93 billion) as of the end of September, accounting for 8.61% of total credit, a central banker has said.
The ratio has declined 1.47 percentage points from 10.08% identified for the end of 2016, Governor of the State Bank of Vietnam Le Minh Hung said at a Q&A session on Friday, part of the ongoing month-long National Assembly sitting.
The amount is considered the most precise estimate of NPLs in the local banking system as it embraces trouble loans on banks’ balance sheets, bad debts sold to the Vietnam Asset Management Company (VAMC), and those that can potentially become toxic.
The governor informed that NPLs registered on banks’ balance sheets accounted for 2.34% of total lending as of September 2017, down from 2.46% at the end of 2016.
To help deal with piling bad debt, the National Assembly in June approved a resolution allowing the repossession of mortgage. This move has been applauded by Moody’s Investors Service.
After a decade of loosened credit growth and bank openings, Vietnam is now struggling with bad debt and under-capitalized banks. The bad debt ratio was identified at 17% for 2012, among the highest ratios in Asia.