A Closer Look on Bad Debts of Vietnam Banks

According to the State Bank of Vietnam (SBV), non-performing loans of the entire system occupied 8.8-10% of total credits and the pace of NPL growth has slowed since June.

Meanwhile, financial statements of commercial banks showed that their bad debts all rose in the first nine months of this year.

NPL ratios increased dramatically in Vietcombank (from 2% to 3.21%); ACB (from 0.9% to 2.1%); Sacombank (from 0.57% to 1.4%); BaoVietBank (from 4.56% to 6.13%); and Navibank (from 2.92% to 3.97%).

Some lenders managed to keep bad debts rise insignificantly like Techcombank (from 2.82% to 2.94%); KienLongBank (from 2.77% to 2.78%). Exceptionally, PGBank cut its bad debt ratio by 0.1% to 2.96% by the end of the third quarter.

As of end-Sept, irrecoverable debts-to-outstanding loans ratio of BaoVietBank topped at 2.93%, followed by LienVietPostBank (1.46%); Vietcombank (1.42%); KienLongBank (1.36%); BIDV (1.22%) and Military Bank (1.07%).

In absolute values, BIDV had the largest volume of irrecoverable debts [Group 5 loans], reaching VND3.98 trillion at the end of September. Meanwhile, Vietcombank had VND3.2 trillion irrecoverable loans; Vietinbank had VND2.578 trillion; ACB had VND829.1 billion; Military Bank had VND629.4 billion; Techcombank had VND610.8 billion, etc.

Notably, irrecoverable loans of commercial banks rose significantly from late 2011, surging 53 times at LienVietPostBank to VND243.8 billion; 23.5 times at BaoVietBank to VND170 billion; 1.7 times at Techcombank; 1.8 times at ACB; 1.5 times at Sacombank; 1.82 times at VietinBank; 41% at Vietcombank; 33.5% at MBB; and 79% at Navibank.

Exceptionally, KienLongBank saw irrecoverable loans fall 4% from the end of last year.

However, growth of irrecoverable loans is expected to slow in Q4 as lenders currently speed up tackling bad debts.

The central bank said on its website earlier that the country would strive to curb bad debts of the banking industry at below 3% of total lending by 2015.

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