return icon

Bad debts may increase amid coronavirus outbreak

Bankers anticipate that the coronavirus outbreak will affect the business of many of their clients.

Commercial banks are checking their clients to find those who are likely to be affected by the epidemic. VP Bank estimates that the total could be up to 1,000 and the figure will rise if the epidemic lasts a long time.



Pham Toan Vuong, deputy CEO of Agribank, said his bank does not know the exact number of clients that will suffer and cannot quantify the losses, but he is sure the epidemic will affect the clients’ solvency.

The epidemic has dealt a strong blow on Vietnam’s farm exports to China. Meanwhile, 70 percent of Agribank’s loans are provided to agriculture projects.

Commercial banks are checking their clients to find those who are likely to be affected by the epidemic. VP Bank estimates that the total could be up to 1,000 and the figure will rise if the epidemic lasts a long time.

However, Agribank may feel less pressure than other commercial banks in dealing with bad debts thanks to Decree 116 dated September 7, 2018.

The decree stipulates that in the case of natural calamities and epidemics, clients can restructure their debts while the classified debt groups will remain unchanged.

Meanwhile, there is still no regulation about support in debt restructure in the context of epidemics. Therefore, the increase in bad debts is foreseeable. Once bad debts increase, the amount of money banks as provision against risks will also be higher.

S&P Global Rating predicted that the bad debt ratio of Chinese banks may rise to over 6 percent if the epidemic continues.

In Vietnam, the initial impact on the national economy has become clear.

Pham Quang Dung, CEO of Vietcombank, estimated that the epidemic will affect half of Vietnam’s total goods and businesses’ debt payment capability.

The regulations on debt restructuring are only applied to agriculture enterprises, which means that the debts of enterprises in other fields will be moved to the groups of worse debts.

Dau Tu quoted Nguyen Van Lam, director of Nhat Nam Import/Export, as saying that exports to China will stagnate for a long time. He asked banks to share risks with businesses and to restructure business debts until the epidemic is controlled, not just for 3-6 months.

VP Bank has lowered the lending interest rate by 1-1.5 percent for businesses affected by the coronavirus outbreak in the fields of transport, warehousing and tourism.

Nguoi Dong Hanh reported that bad debt ratios have decreased at 16 out of 22 banks that have released their Q4 2019 finance report.

The total bad debt at the end of 2019 was VND80.395 trillion, an increase of less than 1 percent compared with the end of 2018. The bad debt ratio had decreased from 1.7 percent to 1.48 percent.

ACB, BacA Bank and Vietcombank had the lowest bad debt ratio, under 1 percent.

Mai Lan

Twelve banks clear all bad debts at VAMC

Twelve banks clear all bad debts at VAMC

Twelve out of 40 commercial banks have so far cleared all their non-performing loans (NPLs) kept at the Vietnam Asset Management Company (VAMC).

Banks auction mortgaged assets to recover bad debt

Banks auction mortgaged assets to recover bad debt

Commercial banks are attempting to sell off a host of mortgaged assets, including real estate and cars, to speed up the settlement of huge bad debt.  


EuroCham Chairman praises strong and forward-looking government

Vietnam’s recovery has been ensured by strong and forward-looking government support which helped to bring in more high-profile FDI projects

Many firms suspend raising capital from stock market

Many enterprises have either stopped mobilizing capital or changed their capital-raising plans on the stock market amid existing uncertainties and disadvantages.

HCM City runs out of Covid-19 vaccines

HCM City has run out of Covid-19 vaccines over the past 10 days, said Nguyen Hong Tam, the deputy director of the municipal Centre for Disease Control and Prevention.


Chinese police hand over wanted man to Lao Cai authorities

Foreign-invested enterprises face up to procedural barriers

Administrative procedures such as a prolonged timeline for obtaining business licences, as well as overlaps in the legal framework, are continuing to affect the expansion plans of many foreign-invested enterprises in Vietnam. Vietnam among ten attractive destinations to escape Europe’s winter

With its year-round warm tropical climate, breathtakingly beautiful scenery, and exciting culture, Vietnam is gradually becoming an attractive destination for German tourists.


Real estate sector faces debt default risk

Shan Tuyet tea, valuable timber plants named ‘Vietnam Heritage Trees’

More than 1,300 Shan Tuyet tea plants in Ha Giang province and a group of valuable timber trees in Dak Nong province have been recognised as “Vietnam Heritage Trees”.

Fast fashion brands scale up for growth

Surviving and developing in a competitive fast fashion market remains a challenge for many brands, especially for newcomers.

Arguments arise as properties required to be traded on exchange

Controversy has arisen over the Ministry of Construction’s draft of the amended law on real estate trading as it requires real estate products to be traded on an official exchange.

Boeing accelerates cooperation with Vietnamese suppliers

Boeing, the world’s leading aerospace company based in the US, are accelerating cooperation with Vietnamese suppliers and universities to provide a foundation for long-term industrial growth.

Expecting coffee exports to hit a record $4 billion

Vietnam Coffee Cocoa Association (Vicofa) forecasted that if the export price of coffee remained at a high level, as in the first half of the year

Major investors worry as stock market weakens

The stock market boards have been covered with red amid investors’ rising caution. There are few buyers, while selling pressure still exists. Foreign investors’ behavior has affected the market.

Vietnam sees great potential in ASEAN halal market

Despite opportunities available in the ASEAN halal food market, Vietnamese exporters have to date exported only a small amount of halal products to some countries in the region.

Vietnam is becoming a beacon in the region: The Brussels Times

The Brussels Times of Belgium has run an article highlighting that Vietnam is becoming a beacon in the region with the capacity to control inflation and maintain economic growth at a high level despite turbulent international affairs.