After reviewing their business performance over the third quarter, most commercial banks announced positive results with double-digit growth. However, the amount of bad debt is also on the rise. Is the situation signaling a risk or just a normal trend?
This financial report shows one commercial bank’s third quarter growth rate as a 30 percent increase year-on-year. The number can be considered impressive compared to many other firms operating, with the favourable results mainly driven by strong economic growth.
However, the fifth group of bad debts, or those with the highest risks, has also increased dramatically. Specifically, 13 over 17 banks have bad debts that include group-five debts.
According to experts, the increase of bad debts is an unavoidable consequence of hot credit growth. The rise is also derived from the strict criteria for classifying debts. Experts also reassure that the current increasing pace of bad debts should not be a significant problem.
Despite an increase of bad debts, Moody’s has lifted its credit rating for 12 banks and spoken highly of their significant improvements in controlling bad debts./. –VNA
