Bad debts of the banking system by the end of 2016 is estimated to inch down to 2.8 per cent from 2.9 per cent in 2015. — Photo cafef.vn

Non-performing loans (NPLs) of the banking system by the end of 2016 is estimated to inch down to 2.8 per cent from 2.9 per cent in 2015, according to the National Financial Supervisory Committee.

According to the committee, credit institutions handled roughly VND95 trillion (US$4.185 billion) of NPLs in 2016, of which 52.6 per cent were recouped from selling mortgaged assets, 26.6 per cent were settled by using provisions for risk loans, and 21 per cent were sold to the Viet Nam Asset Management Company (VAMC).

Despite the slight decline, the committee said that the settlement of bad debts remained challenges as a total unsolved bad debts worth VND224 trillion, or 85 per cent of total bad debts sold to VAMC by credit institutions and accounting for roughly 4.3 per cent of the country’s total outstanding loans, remained stuck at VAMC.

The committee’s report also showed that provisions for risk loans of the entire banking system in 2016 estimated to rise roughly 11.9 per cent against 2015. The rise of provisions in 2015 was 5.4 per cent. — VNS