Banking transactions are conducted at a branch of HDBank in HCM City. The ratio of non-performing debt in the southern city's loans was reported at 4.85 per cent. — VNA/VNS Photo Hoang Hai

HCM CITY (Biz Hub) — There were VND45.85 trillion, or US$2.183 billion, worth of non-performing loans (NPLs) in HCM City at the end of March, accounting for 4.85 per cent of the city's total loans.

The online Sai Gon Economic Times reported that the number of potentially irrecoverable debts, or Group 5 debts, remained high, representing 73.02 per cent of the city's total NPLs, a slight decrease from 75.7 per cent at the end of 2013.

According to the central bank's HCM City branch, the city's lending in the first quarter this year rose very slowly, by just 0.57 per cent, from the end of last year to VND954 trillion, or $45.428 billion.

Deputy Director of the central bank's HCM City branch Nguyen Hong Minh attributed the slow lending increase in Q1 to a weak demand of the economy.

Credit institutions too hesitated to lend as NPLs remained significantly high, Minh added.

Minh said that the credit growth in Q1 was mainly thanks to a rise in foreign currency lending, especially in January. Domestic importers borrowed large sums of foreign currencies in Q1 to import goods to meet the rising demand during the Lunar New Year holiday.

By the end of February, the outstanding loans in Vietnamese dong amounted to VND790.682 trillion, or $37.651 billion, down 1.38 per cent from the end of 2013. The outstanding loans in foreign currencies maintained steady growth in the first two months and reached VND155.611 billion, or $7.41 million, up 2.96 per cent from the end of 2013.

In Q1, firms in the prioritised industries of agriculture and rural development, export, small- and medium-sized enterprises, supporting industries and high-tech applications borrowed VND133 trillion, or $6.33 billion, up nearly 5.4 per cent against the end of last year. The preferential interest rates for the firms were under 9 per cent yearly. — VNS