return icon Vietnamnet.vn

Moody's: NPL ratio in Vietnam at least 15 percent

 VietNamNet Bridge – Moody’s maintains the "negative" outlook on Vietnam's banking system. It also said that the non-performing loan ratio is much higher than the official figure of 4 percent reported by the State Bank of Vietnam in October 2013.

VietNamNet Bridge – Moody’s maintains the "negative" outlook on Vietnam's banking system. It also said that the non-performing loan ratio is much higher than the official figure of 4 percent reported by the State Bank of Vietnam in October 2013.



{keywords}




Moody's Investors Service has recently published its report titled "Vietnam Banking System Outlook" on the prospects for the banking system in 2014.

Accordingly, the "negative" outlook is retained for the banking system of Vietnam, although it recognizes recent signs of stabilization on the macroeconomic.

Moody's said that the recent improvement of the macroeconomic along with a series of changes in legislation will bring about positive results for Vietnam in the next 2-3 years.

Among other constructive developments, Moody's notes that the Vietnamese government has taken steps to stabilize liquidity in the banking sector, which have made the risk of a systemic crisis more remote.

"However, we do not expect a significant broad-based improvement in the capitalization of Vietnamese banks in the next 12-18 months. Capital remains inadequate to absorb the extent of potential losses stemming from pervasive weaknesses in asset quality," said Gene Fang, a Moody's Vice President and Senior Analyst.

Moody's estimates to comprise, significantly above the 4.7% non-performing loan ratio reported by the State Bank of Vietnam in October 2013.

This credit rating agency also said that problem assets in the system are at least 15 percent of total assets.

Not only Moody's, many credit rating organizations said that Vietnam’s NPL ratio is much higher than the figure released by the State Bank of Vietnam and it may be at the 2-digit level. Fitch also said that Vietnam’s NPL ratio may account for 15 percent.

Most recently, in late 2013, a representative of the State Bank of Vietnam said that the NPL ratio of the banking system reduced to 3.79 percent. In fact, there is a gap between the NPL ratios reported by commercial banks and those defined by management agencies. Normally, the numbers released by supervisory bodies are several percentage points higher but they have never reached up to the 2 digits as the assessment of foreign organizations.

At a recent meeting, a leader of the State Bank of Vietnam said the bank would take measures to minimize the gap. He said all credit institutions must conduct audits of credit quality to clarify the bad debts to have appropriate solutions.

According to Moody's, recent policies - such as the Vietnam Asset Management Company designed to take over banks' problem loans - have not directly addressed undercapitalization in the banking system.

It also said that profitability remains stagnant in a challenging operating environment, in which an improved external position has yet to revive domestic demand. Weak loan demand is depressing bank margins, which remain insufficient to offset rising credit costs and improve internal capital generation. Though bank regulators are aware of the need to improve accounting standards and transparency, decisive policies to address these issues have yet to be implemented.

Discussions around attracting foreign capital have also yielded limited results, since a cap on foreign investments continues to prevent control of domestic banks by foreign investors, according to the report.

Moody's rates nine banks in Vietnam, including two government-controlled banks and seven joint-stock banks.

Na Son

MORE NEWS

Successor for Coach Park Hang-seo to arrive in Vietnam soon

If the negotiations are successful, coach Philippe Troussier may sign a contract with the Vietnam Football Federation (VFF) this week, becoming the successor to coach Park Hang-seo to lead Vietnam’s national football teams.

Positive signs ahead for Vietnamese pangasius exports to US, China

Despite a significant fall in exports in 2022, there are bright prospects ahead for pangasius exports this year thanks high demand from China and the United States – the two major markets for Vietnam, according to insiders.

Vietnamese students win gold at Invention Creativity Olympic 2023

Four Vietnamese students from Le Hong Phong High School for the Gifted in the northern province of Nam Dinh won a gold medal at the World Invention Creativity Olympic (WICO) 2023, which recently concluded in the Republic of Korea (RoK).

MIC acts as cradle for digital tech firms to test their products

Minister of Information and Communications Nguyen Manh Hung stressed that MIC is the leading ministry in the Make-in-Vietnam campaign and serves as the cradle for technology firms to experiment with and develop products.

Hanoi among world's top culinary destinations in 2023

Hanoi was voted by readers of the world's largest travel platform Tripadvisor as one of the world's top 20 culinary destinations in 2023.

Vietnamese young people set off for military and public security service

In 2023, more than 4,200 young people in Hanoi will perform military and public security service.

VIETNAM NEWS HEADLINES FEBRUARY 6/2023

Improvement of consular services to continue: official

VIETNAM BUSINESS NEWS FEBRUARY 6/2023

Agro-forestry-fishery exports reach 3.7 bln USD in January

Sister Sister 2 to compete at 2023 Osaka Asian Film Festival

"Chị chị em em 2", known as “Sister Sister 2” in English, directed by Vu Ngoc Dang will represent Vietnam at the 2023 Osaka Asian Film Festival scheduled to get underway from March 10 to 19.

VN representative wins first runner-up title at Mrs Universe 2022

Hoang Thi Thanh Nga, the Vietnamese representative at Mrs Universe 2022, was awarded the first runner-up title during the beauty pageant’s grand final held in Bulgaria on February 5.

Proposal to allow HMC City hospital to culture SARS-CoV-2 virus

HCM City’s Health Department has proposed the Ministry of Health permit the city's Hospital for Tropical Diseases to culture the SARS-CoV-2 virus in its laboratory.

Vietnam's Phuoc Thinh finishes fifth at Mister Tourism World 2023

Vietnamese model Phung Phuoc Thinh claimed the fifth runner-up title at the Mister Tourism World male pageant which concluded in the Philippines on February 4.

Over 80% of real estate bonds have low creditworthiness: FiinRatings

Over 80% of real estate bonds have been issued by unlisted firms that are financially weak and have low transparency, said the credit rating agency FiinRatings.

Panama-flagged AH SHIN catches fire in Vietnamese waters

Relevant forces are attempting to put out a blaze which broke out on the Panama-flagged AH SHIN in the waters off Ba Ria – Vung Tau province, southern Vietnam.

Vietnam wins numerous ASEAN tourism awards

Many units of Vietnam were named in categories of the ASEAN Tourism Awards at a ceremony held as part of the ASEAN Tourism Forum (ATF) 2023, which wrapped up in Jakarta, Indonesia on February 5.
back_to_top