VietNamNet Bridge – Non-performing loans totalled VND138.98 trillion (US$6 billion) by the end of July, accounting for 4.58 per cent of commercial banks' total loans, according to the latest data from the State Bank of Viet Nam.



{keywords}

Previously, commercial banks reported their bad debt ratio to the end of June was 4.46 per cent, while the ratio to the end of April was 4.67 per cent.— Photo vietstock

 

 

The data was compiled based on reports from commercial banks.

Previously, commercial banks reported their bad debt ratio to the end of June was 4.46 per cent, while the ratio to the end of April was 4.67 per cent.

The central bank is yet to release its own figures, which often differ from those provided by commercial banks, on the banks' bad debts to the end of July.

To tackle bad debts, the central bank launched the Viet Nam Asset Management Company (VAMC) in July, with the task of buying them back from commercial banks. The company is expected to deal with VND40-70 trillion worth of NPLs this year.

Early this week, VAMC sent dispatches to State-owned commercial banks and others with high bad debt ratios to encourage lenders to quickly arrange plans for selling the loans to VAMC in accordance with current laws.

Together with the launch of VAMC, commercial banks themselves are also improving their asset management companies (AMCs) to consolidate their bad debts.

Vietinbank, for example, plans to increase charter capital for its AMC 16-fold, from VND30 billion to VND500 billion.

The Bank for Investment and Development of Viet Nam is also recruiting more staff for its AMC, while Agribank is also promoting its AMC after previously dissolving the company. Experts said the launch of VAMC is intended to encourage commercial banks to be more active in using their own AMCs to deal with their bad debts, as this will prove more effective and cheaper for banks.

The central bank aims to have dealt with the bad debts by the end of 2015. It also expects to improve and effectively control credit quality to meet a project on fully restructuring the country's credit institution system in the 2011-15 period.

Source: VNS