Bad debts rise to 2.62% by Q1 end

Tuesday, May 31, 2016 18:07

Credit institutions showed that their bad debts increased significantly in Q1. — Photo
HA NOI (Biz Hub) – Non-performing loans (NPLs) at credit institutions by the end of the first quarter this year increased to 2.62 per cent from 2.55 per cent late last year.


This news was released in a new report from the State Bank of Viet Nam.

Financial reports from credit institutions also showed that their bad debts had increased significantly in Q1.

BIDV, the country's second-largest bank in terms of assets, remained the bank with the highest NPLs, amounting to more than VND11 trillion (US$488.8 million) at the end of Q1. The amount accounted for 1.8 per cent of the bank's total outstanding loans and marked an increase against the 1.67 per cent rate reported at the end of last year.

BIDV attributed the rise in bad debts to its merger with the ailing Mekong Housing Bank (MHB) last year.

The same trend was seen at major banks Vietcombank and Vietinbank. By the end of March this year, Vietcombank's NPL ratio increased to 1.84 per cent and the rate at Vietinbank was 0.96 per cent.

Eximbank's bad debts were worth VND2.3 trillion, accounting for 2.78 per cent of the bank's total outstanding loans. The ratio was up against the 1.85 per cent rate reported at the end of last year.

Some other banks reported a sharp rise in risk provision costs, though they have not released information on their NPLs as yet. SHB, for example, spent more than VND168 billion on provisions in the first quarter. The bank's provisions in the same period last year was only nearly VND8 billion.

For the Asia Commercial Joint Stock Bank (ACB), although its pre-tax profits in Q1 increased by 8.35 per cent over the same period last year to VND389 billion, the bank had to spend VND22.25 billion on provision costs, an increase of 23.91 per cent year-on-year.

At the recent annual shareholders meeting, ACB said the total liabilities related to the group of six companies under its former CEO Nguyen Duc Kien remained at VND5.767 trillion. In Q1/2016, ACB set aside VND200 billion in reserve to pay towards this debt.

ACB leaders also said the bank still had two bad debts linked to two major banks that the central bank had acquired for zero dong, with VND400 billion in bad debts from the Construction Bank and VND772 billion from GPBank. ACB had to set aside VND176 billion in reserve to cover the bad debts of the Construction Bank alone.

Another listed bank that also had to increase provision costs in Q1 was Saigon-Hanoi Commercial Joint Stock Bank (SHB). SHB's Q1 profit reached VND244 billion, up 47 per cent year-on-year, but its provision costs amounted to more than VND168 billion.

Experts warned that credit institutions should scrutinise their plans to boost lending as overextending credit at this time could cause a sharp rise in bad debts later. - VNS

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