The Government has proposed the National Assembly allow extending the validity of Resolution 42 on bad debt settlement until 2023, it was announced at the 15th National Assembly’s third session on May 24.
Many banks are rushing to sell land and other assets used as collateral for loans to collect debts, including properties worth trillions of dong.
Banks have been increasing the attraction of deposits to have enough capital for the credit needs of customers. Credit demand is expected to increase from the first quarter of this year.
Though businesses need the Government’s economic recovery packages to rebound from the pandemic, the Government should consider limiting the participation of commercial banks in the packages to help them avoid bad debt risks, experts suggest.
Many banks have recently offered to sell mortgaged assets, mainly real estate, worth billions of VND, to recover debts amid the recovery of the realty market.
Bad debts may climb by the end of the year as the pandemic has interrupted the production of many enterprises and they had no revenue to repay debts.
Non-performing loans are still increasing despite slow credit expansion as the COVID-19 pandemic stretches many businesses to their limits.
A number of banks have announced plans to auction off their collateral assets in an attempt to speed up bad debt recovery.
At Sacombank’s annual general meeting held on June 5 its permanent vice chairman Pham Van Phong said that in 2019 the bank’s pre-tax profit increased by 43.2 per cent to VND3.2 trillion (US$137.5 million), which was 21.4 per cent above the target.
The Vietnam Asset Management Company (VAMC) targeted to settle bad debts worth totally VND50 trillion (US$2.15 billion) this year.
Commercial banks all can anticipate a sharp fall in profits this year because of Covid-19, though they faced difficulties later than other businesses.
Forty-nine BOT (build-operate-transfer) transport projects have been reported as having revenue below expectations.
Overdue debts, which are increasing rapidly during Covid-19, will adversely affect business results and capital growth capability of many commercial banks in Vietnam.