Bad debts get worse

Even after launching a credit package worth hundreds of trillions of dong to support businesses, bad debts will still increase this year.

From August 15, 2017 to the end of March 2020, the banking system settled VND299.8 trillion worth of bad debts in accordance with Resolution 42. However, analysts believe that bad debts will increase as businesses’ operations are at a standstill.

Bad debts get worse



Anticipating high risks, commercial banks have to increase provisions against risks and step up the sale of collateral to collect debts.

Under the plan, 2020 is the deadline for the settlement of bad debts sold to VAMC. If the bad debts still cannot be settled, banks will have to buy the debts back for settlement.

Nguyen Duc Thach Diem, CEO of Sacombank, said the bank aims to settle VND11 trillion worth of bad debts this year and believes the goal is within reach.

Meanwhile, SCB is offering to sell 7 real estate assets worth several billion dong to hundreds of billion of dong. LienVietPost Bank has also put mortgaged assets into auction with starting prices from hundreds of millions of dong to hundreds of billions of dong.

Banks’ Q1 finance reports showed that the third-, fourth- and fifth-group debts (fifth-group debt is the worst debt which may be irrecoverable) have increased rapidly. Kien Long Bank reported that the bad debt has increased by 5.7 times to VND2.293 trillion, from 1 percent to 6.62 percent.

According to Nguyen Quoc Hung, director of the Credit Department, around VND1,800 trillion, or 23 percent of total outstanding loans, has been affected by the epidemic.

 


Commercial banks report that they had implemented 40-50 percent of yearly plans by the end of June. However, credit has been growing very slowly.

Bankers said that more mortgaged assets would be put on sale in the time to come, and banks’ profits will decrease sharply because of high provisions against risks.

Nguyen Dinh Tung, CEO of OCB, said businesses are struggling to stop the decline and many of them may go bankrupt, so the bad debts will increase.

Putting mortgaged assets for sale is clearly the best way for banks to collect debts. Nhip Cau Dau Tu quoted some analysts as saying that it is very difficult to find buyers for assets with high value, VND30 billion or more.

To date, commercial banks have committed credit package of VND300 trillion which aims to help businesses overcome the epidemic.

“The policies on restricting debts and extending debt payment deadlines have helped prevent the bad debts from increasing,” said Can Van Luc, chief economist of BIDV.

However, even with the big credit package, bad debts will still increase.

Banks’ Q1 finance reports showed that the third-, fourth- and fifth-group debts (fifth-group debt is the worst debt which may be irrecoverable) have increased rapidly. Kien Long Bank reported that the bad debt has increased by 5.7 times to VND2.293 trillion, from 1 percent to 6.62 percent.

Mai Lan 

Authorities get to grips with new bad debt mountain

Authorities get to grips with new bad debt mountain

A spike in the amount of bad loans sitting in banks’ books has triggered Vietnamese authorities to seek new paths to recovery,

VN credit institutions recover nearly $1.2b of bad debts in Q1 2020

VN credit institutions recover nearly $1.2b of bad debts in Q1 2020

Credit institutions in Viet Nam settled more than VND26.94 trillion (US$1.17 billion) of non-performing loans (NPLs) in the first quarter of this year.  

 
 

Other News

.
HAGL sells over 48 million shares to pay debts
HAGL sells over 48 million shares to pay debts
BUSINESSicon  14/01/2022 

Hoang Anh Gia Lai Joint Stock Company will sell more than 48.1 million shares of its subsidiary HAGL Agrico (HNG) from January 17 to February 15 to pay debt.

WB forecasts Vietnam’s growth at 5.5 percent in 2022
WB forecasts Vietnam’s growth at 5.5 percent in 2022
BUSINESSicon  14/01/2022 

The World Bank (WB) has forecast that Vietnam’s economic recovery is likely to accelerate in 2022 as GDP growth is expected to rise to 5.5 percent from 2.6 percent in the year just ended.

Vietnam reconsiders electricity sources after making international energy commitments
Vietnam reconsiders electricity sources after making international energy commitments
FEATUREicon  14/01/2022 

Vietnam’s commitments at 26th United Nations Climate Change Conference of the Parties (COP 26) will have a big impact on the country’s energy system. 

Vietnam’s economic growth forecast to rebound strongly in 2022
Vietnam’s economic growth forecast to rebound strongly in 2022
BUSINESSicon  13/01/2022 

Some foreign financial organisations have issued relatively positive predictions for Vietnam’s economy this year, with growth expected at 6.5 - 6.7 percent.

Three factors behind FDI attraction in Vietnam
Three factors behind FDI attraction in Vietnam
BUSINESSicon  13/01/2022 

Low labour costs, a geographical location close to Asian supply chains, and Japan and the Republic of Korea (RoK)'s efforts to promote greater overseas investment are considered as three factors in boosting Vietnamese foreign direct investment (FDI).

Live streaming attracts young people to earn money
Live streaming attracts young people to earn money
BUSINESSicon  13/01/2022 

Making money on online platforms and social networks is increasingly popular in the labor market, streamer jobs have become popular keywords for many young people.

Power Development Plan VIII under revision again
Power Development Plan VIII under revision again
BUSINESSicon  13/01/2022 

The draft Power Development Plan VIII is being revised again and expected to be submitted to the Prime Minister for approval in the first quarter of 2022.

VIETNAM BUSINESS NEWS JANUARY 13
VIETNAM BUSINESS NEWS JANUARY 13
BUSINESSicon  13/01/2022 

SSC carries out sanctioning procedures of FLC Chairman's huge share sale

VN banks expect to sell more shares to foreign investors in 2022
VN banks expect to sell more shares to foreign investors in 2022
BUSINESSicon  14/01/2022 

A number of Vietnamese banks plan to sell more shares to foreign investors in 2022 as part of set strategies.

Southern key economic region receives large inflow of foreign investment in 2021
Southern key economic region receives large inflow of foreign investment in 2021
BUSINESSicon  14/01/2022 

 Although the fourth wave of the pandemic negatively affected local production and businesses, the inflow of foreign investment to the southern key economic region increased significantly in 2021.

M&A in technology booms during pandemic
M&A in technology booms during pandemic
BUSINESSicon  13/01/2022 

The Mergers and Acquisitions (M&A) market in Viet Nam has been going through a downturn due to the pandemic, but the technology sector is bucking the trend.

Auction mechanism for sustainable development of renewable energy market under scrutiny
Auction mechanism for sustainable development of renewable energy market under scrutiny
BUSINESSicon  13/01/2022 

A Policy Dialogue on “Auction Mechanism for Sustainable Development of the Renewable Energy Market” was held via an online format on January 11 by independent think tank Vietnam Initiative for Energy Transition (VIETSE).

Transport Ministry proposes allowing private firms to invest in airport projects
Transport Ministry proposes allowing private firms to invest in airport projects
BUSINESSicon  13/01/2022 

The Ministry of Transport has proposed mobilizing private resources under the public-private partnership model for new airport projects, such as Quang Tri, Sa Pa and Cao Bang.

Land fever disturbs rural areas, housing dreams squashed
Land fever disturbs rural areas, housing dreams squashed
BUSINESSicon  13/01/2022 

Land fever has attacked not only large cities but also rural areas, leaving young people without hope of buying a house.

Trinh Van Quyet’s transaction canceled, securities accounts blocked
Trinh Van Quyet’s transaction canceled, securities accounts blocked
BUSINESSicon  12/01/2022 

An unreported transaction made by Trinh Van Quyet, Chair of FLC Group, worth VND1.6-1.8 trillion on January 10 has been canceled as he did not report the deal.

Tan Hoang Minh Group withdraws from Thu Thiem land auction, accepts loss of deposit
Tan Hoang Minh Group withdraws from Thu Thiem land auction, accepts loss of deposit
FEATUREicon  12/01/2022 

Tan Hoang Minh Group has sent a letter to the Party, State and Government leaders, and HCM City People’s Committee about its decision to withdraw from Thu Thiem land purchase that it won at auction in mid-December.

Banks criticized for sky-high interest rates, burdening businesses
Banks criticized for sky-high interest rates, burdening businesses
FEATUREicon  13/01/2022 

Many banks made a high profit in 2021 thanks to high lending interest rates. However, they have been warned of ‘making a rod for their own back’.

Land prices soar amid fear for Omicron
Land prices soar amid fear for Omicron
FEATUREicon  13/01/2022 

While affordable apartments are no longer seen in Hanoi and HCM City, apartments priced at hundreds of billions of dong are becoming popular.

Bad debts need to be curbed
Bad debts need to be curbed
BUSINESSicon  13/01/2022 

After the Circular issued by the State Bank of Vietnam on debt restructuring, many bad debts of commercial banks have become non-bad debts because they do not have to change the debt groups.

Vietnam ranks third worldwide in terms of rubber export value
Vietnam ranks third worldwide in terms of rubber export value
BUSINESSicon  12/01/2022 

Vietnam ranked third in the world in terms of rubber export value, with 3.24 billion USD in 2021, up 36.2 percent from the previous year, the Ministry of Agriculture and Rural Development (MARD) said.

 
 
 
Leave your comment on an article

OR QUICK LOGIN