VietNamNet Bridge - Eximbank had the highest non-performing loan (NPL) ratio in the January-September period of 2016, but BIDV took the lead for absolute value with more than VND13 trillion ($580 million). The NPL ratio in the entire banking system was 5.84%.

According to third quarter financial statements of 13 banks, bad loans at most of the banks increased since the beginning of 2016.

The Export-Import Commercial Joint Stock Bank of Vietnam (Eximbank) ranked first for the bad debt ratio in this period. As of September 30, the bank had VND2,705 billion of bad loans, including VND1,079 billion of potentially irrecoverable debts, up 35% over that at the beginning of the year.

Ranking behind Eximbank is the Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), with VND4,620 billion of NPL, including VND3,095 billion of potentially irrecoverable debts. NPLs increased to 2.4% from 1.9% at the beginning of the year.

The Saigon - Hanoi Commercial Bank (SHB) ranked 3rd on the NPL ratio, which rose from 1.72% to 2.22%. Specifically, the total amount of bad debt was VND3,310 billion, including VND1,869 billion of potentially irrecoverable debts, up 46%.

Notably, the Bank for Investment and Development of Vietnam (BIDV) had VND13,217 billion of bad loans, accounting for 1.96% of total loans. This bank’s NPL ratio rose from around 1.6% in late 2015 to nearly 2%, corresponding to more than VND3,160 billion in increased bad loans.

Ranking fifth for the NPL ratio is the Technological and Commercial Bank of Vietnam (Techcombank), with VND2,460 billion by September 30, including potentially irrecoverable debts of more than VND1,438 billion, up 42. The bank’s NPL ratio rose from 1.67% to 1.81%.

At the same time, the NPL ratio of some banks fell, particularly from 2.07% to 1.54% for Vietnam International Bank (VIB), from 1.6% to 1.33% for Military Commercial Joint Stock Bank (MBB), from 1.3% to 1.13% for the Asia Commercial Bank (ACB), and from 2.26% to 1.17% for VietABank.

The two giants – Bank for Foreign Trade of Vietnam (Vietcombank) and VietinBank – had their NPL ratios slightly fall, from 1.8% to 1.7% for Vietcombank and from 0.92% to 0.86% for Vietinbank.

In terms of absolute value, most banks saw their bad loans increase. 

BIDV was on the top with up to VND13,217 billion of bad debts, including nearly VND7,000 billion of potentially irrecoverable debts, up 47% compared to the end of 2015, doubling the charter capital of a number of small-scale banks.

VietinBank had total bad debts of VND5,380 billion, up from VND4,942 billion at the beginning of 2016. Meanwhile, Vietcombank’s total bad debt was VND7,757 billion compared to VND7,137 billion at the beginning of the year, including VND5,414 billion of potentially irrecoverable debts.

According to chairman of the Vietnam Asset Management Company (VAMC) Nguyen Quoc Hung, by August 2016, bad debts of banks reached VND147,000 billion, representing 2.66% of total outstanding loans.

Bad debt increased from 2.55% at the end of 2015 to 2.66%. If including NPLs that credit institutions sold to VAMC after debt recovery and risk settlement, which is VND186,000 billion, the NPLs account for 5.84% of the total outstanding debt balance.

Dr. Nguyen Tri Hieu, a well-known banking and financial expert, told Zing news that the cause of the rise of bad debts at banks is that commercial banks recorded their debts more substantially. In addition, in 2016 VAMC did not buy bad loans but only focused on dealing with the bad debts that it had purchased before.

According to VAMC, from late 2012 to August 2016, credit institutions handled VND548,500 billion in bad loans. VAMC bought 25,062 bad loans from 42 credit institutions totaling VND262,054 billion, at the purchase price of VND227,848 billion.

However, VAMC has just collected VND37,983 billion, equivalent to 15% of the principal debt.

Son Nam