Customers at HDBank's head office in HCM City. Commercial banks sold a large proportion of bad debts to VAMC last year to reduce the bad debt ratio to below 3 per cent. — VNA/VNS Photo Hoang Hai

HA NOI (Biz Hub) — Commercial banks offloaded a large volume of non-performing loans (NPLs) to the Viet Nam Asset Management Company (VAMC) in 2015 to reduce the bad debt rate to below 3 per cent.

This was the rate required by the central bank.

Online business website Bizlive.vn quoted recent financial reports from banks as saying that by the end of 2015, BIDV topped the list of banks those sold bad debts to the national debt trading company with a sale of roughly VND22 trillion (US$977 million), equal to 3.7 per cent of the bank's total outstanding loans in the year.

Besides selling bad debts, BIDV also boosted lending last year, making its credit touch 34.21 per cent by the end of last year. It helped the bank's NPLs reduce from 2.03 per cent in 2014 to 1.62 per cent by December 31, 2015.

Vietcombank also handled more than VND2.6 trillion of NPLs last year, VND2 trillion of which were sold to VAMC. The bad debt rate at the bank stood at 2 per cent by the end of last year.

With a sale of VND6.3 trillion of bad debts to VAMC and a credit growth of 22.3 per cent last year, Vietinbank's bad debt was reported at 0.91 per cent.

MB's non-performing loans also reduced to 1.32 per cent from 2.18 per cent in 2014 after the bank sold roughly VND1.1 trillion of NPLs to VAMC.

In the year, Eximbank and VIB sold more than VND1.4 trillion of the debts each while the number of VP Bank and Techcombank was VND564 billion and VND761 billion, respectively.

According to the current regulations, though they have sold the bad debts to VAMC, banks are still required to establish yearly provisional funds amounting to 20 per cent of the value of the sold debts. Experts, therefore, suggested to lenders that they boost provisions for bad debts, as well as handle and take initiative to collect their debts by themselves, apart from selling to VAMC.

National Financial and Monetary Policy Advisory Council member Tran Du Lich said that selling bad debts to the VAMC was a good way for banks to clean up their account balance, but the requirement for provisions would create significant pressure on them. — VNS