A transaction office of the Bank for Investment and Development of Vietnam (BIDV) (Photo: VNA)
Hanoi (VNS/VNA) - Credit institutions in Vietnam settled more than 26.94trillion VND (1.17 billion USD) of non-performing loans (NPLs) in the firstquarter of this year.
Thelatest report released this week by the State Bank of Vietnam (SBV) showedcredit institutions handled nearly 1.077 quadrillion VND of NPLs from 2012 tothe end of March this year.
Withthe recovery, the bad debt ratio of the whole banking system has remained undercontrol at 1.77 percent of the total outstanding loans by the end of the firstquarter, meeting the Government’s target of keeping the rate below 3 percent in2020.
Tocontinually boost the recovery of bad debts, SBV governor Le Minh Hung hasasked credit institutions to review and provide detailed roadmaps and solutionsfor settling their bad debts each year until 2022.
Creditinstitutions have also been asked to look for buyers for the debts they sold tothe Vietnam Asset Management Company (VAMC), while the VAMC has been required tospeed up the handling of bad debts and collateral the company purchasedfollowing market-based mechanisms.
TheSBV has also issued regulations and policies in line with internationalpractices to improve safety standards in banking, which has contributed tostronger governance and risk management capability under Basel II internationalbanking standards.
Ina recent report, Moody's Investors Service pointed out that downside risksto asset quality of Vietnamese banks can arise from disruptions caused by theCOVID-19 pandemic, which, if prolonged, will lead to increases innon-performing loans in the manufacturing, trade and other sectors, given Vietnam'slarge exposure and close ties to global supply chains.
Accordingto the rating agency, as for profitability, the gap will widen between banksthat have adopted the new Basel II capital standards and those that have not.
Moody'salso expects that in 2020, the country's central bank will grant higher limitsfor loan growth to banks that have adopted Basel II and maintain goodfinancials. The higher growth limits will translate into larger gains inearnings and widen the profitability gap between banks that have and have notadopted the new capital standard./.
