Banking authorities will halt the issue of licences to domestic credit institutions that propose network expansion over the next few months.
The authorities will not allow new establishments such as branches, transaction and representative offices, as well as automated teller machines to be set up. The provision of new business services will also be suspended.
The State Bank of Vietnam (SBV) made the announcement in a document dated July 6. It said the move was part of efforts to reduce the overall ratio of non-performing loans (NPLs) to less than three percent before October 1.
The Government wants the bad debt cap to be achieved by the end of this year, but the SBV has revised the deadline after reviewing banking operations at a meeting with local lenders late last month.
The central bank said credit institutions that failed to match the cap by October 1, would not be able to request for expansion at least till December 31.
SBV Governor Nguyen Van Binh said foreign banks and their branches, along with joint-venture credit institutions, should present bad debt settlement plans to the central bank by July 20, for accomplishing the general goal.
HCM City credit institutions recently said the general NPL ratio remained high at more than five percent, while several banks nationwide reportedly said they would need more provisional funds to support the risk of NPLs.
These banks were Asia Commercial Bank, Saigon Joint Stock Commercial Bank and Vietnam International Bank, as well as Eximbank.
The country's major lenders — Vietcombank and VietinBank — have said provisional funds for bad debts had whittled away their significant profits this year.
Vietcombank Chairman Nghiem Xuan Thanh said the bank earned about 6.04 trillion VND (287.62 million USD) in profits during 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 3.04 trillion VND (144.76 million USD), which represented a year-on-year increase of 9.45 percent.
VietinBank earned 3.07 trillion VND (146.19 million USD) in business profit in Q1, up nearly 24 percent over the same period last year.
However, with a provisional fund increasing 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 reach 1.56 trillion VND (71.428 million USD).
Prime Minister Nguyen Tan Dung directed the SBV last month to increase supervision to ensure that the lending services of credit institutions was effective and safe and used for their intended purpose.-VNA
The authorities will not allow new establishments such as branches, transaction and representative offices, as well as automated teller machines to be set up. The provision of new business services will also be suspended.
The State Bank of Vietnam (SBV) made the announcement in a document dated July 6. It said the move was part of efforts to reduce the overall ratio of non-performing loans (NPLs) to less than three percent before October 1.
The Government wants the bad debt cap to be achieved by the end of this year, but the SBV has revised the deadline after reviewing banking operations at a meeting with local lenders late last month.
The central bank said credit institutions that failed to match the cap by October 1, would not be able to request for expansion at least till December 31.
SBV Governor Nguyen Van Binh said foreign banks and their branches, along with joint-venture credit institutions, should present bad debt settlement plans to the central bank by July 20, for accomplishing the general goal.
HCM City credit institutions recently said the general NPL ratio remained high at more than five percent, while several banks nationwide reportedly said they would need more provisional funds to support the risk of NPLs.
These banks were Asia Commercial Bank, Saigon Joint Stock Commercial Bank and Vietnam International Bank, as well as Eximbank.
The country's major lenders — Vietcombank and VietinBank — have said provisional funds for bad debts had whittled away their significant profits this year.
Vietcombank Chairman Nghiem Xuan Thanh said the bank earned about 6.04 trillion VND (287.62 million USD) in profits during 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 3.04 trillion VND (144.76 million USD), which represented a year-on-year increase of 9.45 percent.
VietinBank earned 3.07 trillion VND (146.19 million USD) in business profit in Q1, up nearly 24 percent over the same period last year.
However, with a provisional fund increasing 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 reach 1.56 trillion VND (71.428 million USD).
Prime Minister Nguyen Tan Dung directed the SBV last month to increase supervision to ensure that the lending services of credit institutions was effective and safe and used for their intended purpose.-VNA
