Banking authorities will halt the issue of licences to domesticcredit institutions that propose network expansion over the next fewmonths.
The authorities will not allow new establishments such asbranches, transaction and representative offices, as well as automatedteller machines to be set up. The provision of new business serviceswill also be suspended.
The State Bank of Vietnam (SBV) made theannouncement in a document dated July 6. It said the move was part ofefforts to reduce the overall ratio of non-performing loans (NPLs) toless than three percent before October 1.
The Government wantsthe bad debt cap to be achieved by the end of this year, but the SBV hasrevised the deadline after reviewing banking operations at a meetingwith local lenders late last month.
The central bank said creditinstitutions that failed to match the cap by October 1, would not beable to request for expansion at least till December 31.
SBVGovernor Nguyen Van Binh said foreign banks and their branches, alongwith joint-venture credit institutions, should present bad debtsettlement plans to the central bank by July 20, for accomplishing thegeneral goal.
HCM City credit institutions recently said thegeneral NPL ratio remained high at more than five percent, while severalbanks nationwide reportedly said they would need more provisional fundsto support the risk of NPLs.
These banks were Asia Commercial Bank, Saigon Joint Stock Commercial Bank and Vietnam International Bank, as well as Eximbank.
Thecountry's major lenders — Vietcombank and VietinBank — have saidprovisional funds for bad debts had whittled away their significantprofits this year.
Vietcombank Chairman Nghiem Xuan Thanh saidthe bank earned about 6.04 trillion VND (287.62 million USD) in profitsduring H1, an increase of 16.6 percent over the same period last year.
However,the establishment of a provisional fund of nearly 2.30 trillion VND(109.52 million USD) resulted in the real H1 profit of only 3.04trillion VND (144.76 million USD), which represented a year-on-yearincrease of 9.45 percent.
VietinBank earned 3.07 trillion VND(146.19 million USD) in business profit in Q1, up nearly 24 percent overthe same period last year.
However, with a provisional fundincreasing by 1.5 times to touch 1.51 trillion VND (71.90 million USD),its Q1 pre-tax profits grew by only 7.3 percent year-on-year to reach1.56 trillion VND (71.428 million USD).
Prime Minister Nguyen TanDung directed the SBV last month to increase supervision to ensure thatthe lending services of credit institutions was effective and safe andused for their intended purpose.-VNA
The authorities will not allow new establishments such asbranches, transaction and representative offices, as well as automatedteller machines to be set up. The provision of new business serviceswill also be suspended.
The State Bank of Vietnam (SBV) made theannouncement in a document dated July 6. It said the move was part ofefforts to reduce the overall ratio of non-performing loans (NPLs) toless than three percent before October 1.
The Government wantsthe bad debt cap to be achieved by the end of this year, but the SBV hasrevised the deadline after reviewing banking operations at a meetingwith local lenders late last month.
The central bank said creditinstitutions that failed to match the cap by October 1, would not beable to request for expansion at least till December 31.
SBVGovernor Nguyen Van Binh said foreign banks and their branches, alongwith joint-venture credit institutions, should present bad debtsettlement plans to the central bank by July 20, for accomplishing thegeneral goal.
HCM City credit institutions recently said thegeneral NPL ratio remained high at more than five percent, while severalbanks nationwide reportedly said they would need more provisional fundsto support the risk of NPLs.
These banks were Asia Commercial Bank, Saigon Joint Stock Commercial Bank and Vietnam International Bank, as well as Eximbank.
Thecountry's major lenders — Vietcombank and VietinBank — have saidprovisional funds for bad debts had whittled away their significantprofits this year.
Vietcombank Chairman Nghiem Xuan Thanh saidthe bank earned about 6.04 trillion VND (287.62 million USD) in profitsduring H1, an increase of 16.6 percent over the same period last year.
However,the establishment of a provisional fund of nearly 2.30 trillion VND(109.52 million USD) resulted in the real H1 profit of only 3.04trillion VND (144.76 million USD), which represented a year-on-yearincrease of 9.45 percent.
VietinBank earned 3.07 trillion VND(146.19 million USD) in business profit in Q1, up nearly 24 percent overthe same period last year.
However, with a provisional fundincreasing by 1.5 times to touch 1.51 trillion VND (71.90 million USD),its Q1 pre-tax profits grew by only 7.3 percent year-on-year to reach1.56 trillion VND (71.428 million USD).
Prime Minister Nguyen TanDung directed the SBV last month to increase supervision to ensure thatthe lending services of credit institutions was effective and safe andused for their intended purpose.-VNA
