A view of a TPBank’s transaction office in Hanoi (Photo: VNA) The latest financial statement of TPBank showed the bank's totalNPLs by the end of the second quarter of 2023 increased by nearly three timescompared to the beginning of this year to 3.91 trillion VND.
Of which, substandard debts increased 5.6 times to 2.14 trillionVND and doubtful debts also increased nearly 2.5 times to nearly 1.13 trillionVND. The ratio of NPLs to total outstanding loans of the bank increased sharplyfrom 0.84% at the beginning of this year to 2.21%.
At BaoVietBank, the total NPLs as of June 30 was 1.75 trillion VND,up 58% compared to the beginning of the year. Notably, BaoVietBank'spotentially irrecoverable debts doubled to 1.52 trillion VND and doubtful debtalso increased by 41% to 154 billion VND, which caused the bank’s NPL ratio toincrease from 3.34% to 4.69%.
Similarly, the total NPLs at ABBank also increased by 61% comparedto the beginning of this year to 3.82 trillion VND as of June 30, 2023.Therefore, the bank’s NPL ratio increased sharply to 4.55% from 2.89% earlierthis year.
Not out of the trend, Bac A Bank recorded a bad debt increase ofmore than 32% compared to the beginning of the year, to about 679 billion VND,mainly due to a sharp increase in sub-standard debts by 316% to 175 billion VND.The ratio of NPLs to total outstanding loans of the bank increasedsignificantly to 0.7% if compared to the rate of 0.55% at the beginning of thisyear.
As one of the first banks to publish H1 2023 financial statements,LPBank recorded an 80% rise of potentially irrecoverable debts after the firsthalf of this year to 2.43 trillion VND, which pushed the bank’s total NPLs tosurge by 65% to 5.65 trillion VND.
At PGBank, NPLs after the first half of this year also increased bynearly 12.7%, lifting the bank’s bad debt ratio to 2.77% by the end of June2023.
Techcombank also recorded a bad debt increase in the period,though it also gained many bright spots in business performance, such as highprofit and CASA (current account savings account) improvement in H1.
The bank’s NPL ratio inched up from 0.9% at the end of 2022 to1.07 % at the end of the second quarter of 2023, while the bad debt coverageratio decreased from 125% at the end of last year to 115.8%.
For State-owned commercial banks, although they have notofficially announced their financial statements, their business performanceresults in the first half of 2023 have been revealed partly.
VietinBank’s Deputy General Director Nguyen Hoang Dung said thebad debt ratio was controlled at 1.1% and met the bank’s plan, while the NPLcoverage ratio also continued to remain high at 170%.
At Vietcombank, General Director Nguyen Thanh Tung revealed by theend of June 2023, the bank’s credit quality was controlled with a bad debtratio at 0.85%. Although the ratio was the lowest level in the country’sbanking system, it increased compared to Vietcombank's rate of 0.68% at theend of 2022.
As for Agribank, the bad debt ratio increased again due todomestic and global economic headwinds though it reduced from 8.1% to 1.86%after restructuring in the 2016-2020 period.
Pham Duc An, Chairman of Agribank's board of members, saidAgribank's bad debt ratio as of June 30, 2023 increased to exactly the same asthe end of the restructuring in the 2016-2020 period, and the ratio is underrising pressure in the coming time.
Having faced the fact that bad debts are getting bigger andbigger, banks have aggressively auctioned to sell collateral to recover thedebts, but the work is not easy.
For example, at Vietcombank, the collateral of an EvergreenTechnology Company’s debt, including land use rights and machinery systems, atthe bank has been put up for auction many times over the past year but has notfound buyers, though the price dropped by more than VNĐ300 billion compared tothe initial price.
Nguyen Quoc Hung, General Secretary of the Vietnam BanksAssociation, said the debt recovery has faced many difficulties, such as thefrozen real estate market.
According to experts, this is not the peak of bad debt becausepayment of many debts are still re-scheduled according to a circular by the StateBank of Vietnam.
When the circular expires on June 30 next year, the actual numberof bad debts must be higher.
Banking expert Dr. Can Van Luc said the increase in bad debt is acommon trend of the world in the current difficult context. Though bad debtsincrease compared to 2022, it is still under control. In order to reduce theburden of rising bad debts in the future, banks are still actively setting upprovisions for higher risk cases.
According to Luc, Circular 02/2023/TT-NHNN from SBV requires banksto make provisions for risky debts to ensure that they will be still settledeven in the worst scenarios.
Though the bad debt coverage ratio out of the total outstandingloans of the economy is currently at 135%, not as high as a few years ago, itis still an important resource for banks to handle bad debts./.
VNA
