Banks still struggling to settle bad debts
VietNamNet Bridge - Sacombank and VP Bank are leading the list of banks with the highest NPL (non-performing loans) ratios.


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Many banks report big profits for 2017



Sacombank tops the banks with high NPL ratios. Its bad debt by the end of the third quarter of 2017 had accounted for 5.9 percent of the outstanding loans (VND13.264 trillion), according to kienthuc.net.vn. 

Reports show an increase in fourth-group bad debt (VND3.251 trillion), up by 24 percent, while the fifth-group bad debt had reached VND9.593 trillion, up by 12.7 percent.

In Vietnam, NPL are classified into five groups with the fifth-group debt being the most serious, which is seen as irrecoverable. 

The second position belongs to VP Bank. A Q3 finance report showed that the consumer outstanding loans of FE Credit, its finance company, accounted for one-fourth of the bank’s outstanding loans. 

The 3 percent ceiling bad debt is applied only to commercial banks.

Sacombank and VP Bank are leading the list of banks with the highest NPL (non-performing loans) ratios.

If only considering VP Bank holding company, the bank’s balance sheet bad debt ratio is below the 3 percent ceiling, at 2.6 percent. However, if counting the bad debt left at VAMC (the Vietnam Asset Management Company), the figure would be higher, at 5.21 percent.

BIDV, with VND17 trillion worth of bad debt by the end of the third quarter, which accounted for 2.08 percent of outstanding loans, has the third highest NPL. 

By the end of 2016, the NPL of the bank was at VND14 trillion only, or 1.99 percent of outstanding loans.

BIDV’s bad debts belong to three groups, of which the fifth-group debt has increased by 33 percent compared with the end of 2016, from VND6.911 trillion to VND10.463 trillion.

Analysts believe that with the current level of provisioning, BIDV is likely to reduce the bad debt ratio (both balance sheet and off-balance sheet) to below 3 percent, because the current ratio is just a bit higher at 3.5 percent. 

Similarly, Eximbank reports a bad debt ratio of below 3 percent, but if counting the bad debts sold to VAMC, the figure would be 7.08 percent.

Meanwhile, SHB has reported a high bad debt ratio of 4.8 percent, which includes bad debts at VAMC.

VIB Bank, though buying back bad debts from VAMC, still has a bad debt ratio at 3.83 percent.

A report from the HCMC Securities Company shows that most bad debts belong to small banks and are mortgaged with real estate. 

It is estimated that VND400 trillion worth of bad debt of the entire banking system still has not been settled, or 6.1 percent of total outstanding loans as of the end of the third quarter.


US$1=VND22,000


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Kim Chi

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