VietNamNet Bridge – The health of the local banking system is falling, which is evident in its capital adequacy ratio (CAR) drop.

According to statistics from the central bank, the local banking system reported a CAR of 13.22% as of the end of October, a mild slide compared to 13.43% at the end of September.

The statistics did not include banks with negative equity, meaning that the real CAR was lower than the figure announced.

State-run banks including VietinBank, Vietcombank and BIDV were blamed for the lower CAR of the banking sector. They reported a ratio of 9.89% versus 10.07% a month earlier. The group posted a CAR of 10.44% at the end of June.

Commercial joint stock banks also saw their CAR falling from 12.48% to 12.27% at the end of October. Meanwhile, the CAR of joint-venture and foreign banks inched down slightly to 31.24% from 31.27%.

However, the statistics indicated that the return on asset (ROA) and return on equity (ROE) ratios of the banking system improved slightly. The ROA stood at 0.51%, compared to 0.36% a month earlier, while the ROE jumped from 3.81% to 5.49%.

The central bank calculated the ratios from financial reports in the third quarter of 2014, excluding credit institutions with negative equity and data of people’s credit funds.

Total assets of the banking system at the end of October were VND6,170 trillion, up 6.34% versus the previous month.

The ratio of short-term capital used for medium- and long-term lending was 19.42%, up from 19.04% at the end of the third quarter.

The loan-to-deposit (LDP) ratio was 83.43%, rising from 82.72% at the end of September.    

SGT/VNN