Monday, February 26, 2024 12:44:42 PM - Markets open
VN-INDEX 1,215.85 +3.85/+0.32%
HNX-INDEX 230.52 -0.55/-0.24%
UPCOM-INDEX 89.90 -0.26/-0.29%
Bad debts skyrocket in wake of poor business performance
Vietnam News - 8/8/2023 11:06:36 AM
 (0 ratings. You must sign in to rate.)
Total non-performing loans (NPLs) at many banks surged in the first half of this year due to the poor business performance of the whole economy, and experts forecast the trend will continue.
 
The latest financial statement of TPBank showed the bank's total NPLs by the end of the second quarter of 2023 increased by nearly three times compared to the beginning of this year to VNĐ3.91 trillion.
 
Of which, substandard debts increased 5.6 times to VNĐ2.14 trillion and doubtful debts also increased nearly 2.5 times to nearly VNĐ1.13 trillion. The ratio of NPLs to total outstanding loans of the bank increased sharply from 0.84 per cent at the beginning of this year to 2.21 per cent.
 
At BaoVietBank, the total NPLs as of June 30 was VNĐ1.75 trillion, up 58 per cent compared to the beginning of the year. Notably, BaoVietBank's potentially irrecoverable debts doubled to VNĐ1.52 trillion and doubtful debt also increased by 41 per cent to VNĐ154 billion, which caused the bank’s NPL ratio to increase from 3.34 per cent to 4.69 per cent.
 
Similarly, the total NPLs at ABBank also increased by 61 per cent compared to the beginning of this year to VNĐ3.82 trillion as of June 30, 2023. Therefore, the bank’s NPL ratio increased sharply to 4.55 per cent from 2.89 per cent earlier this year.
 
Not out of the trend, Bắc Á Bank recorded a bad debt increase of more than 32 per cent compared to the beginning of the year, to about VNĐ679 billion, mainly due to a sharp increase in sub-standard debts by 316 per cent to VNĐ175 billion. The ratio of NPLs to total outstanding loans of the bank increased significantly to 0.7 per cent if compared to the rate of 0.55 per cent at the beginning of this year.
 
As one of the first banks to publish H1 2023 financial statements, LPBank recorded an 80 per cent rise of potentially irrecoverable debts after the first half of this year to VNĐ2.43 trillion, which pushed the bank’s total NPLs to surge by 65 per cent to VNĐ5.65 trillion.
 
At PGBank, NPLs after the first half of this year also increased by nearly 12.7 per cent, lifting the bank’s bad debt ratio to 2.77 per cent by the end of June 2023.
 
Techcombank also recorded a bad debt increase in the period, though it also gained many bright spots in business performance, such as high profit and CASA (current account savings account) improvement in H1.
 
The bank’s NPL ratio inched up from 0.9 per cent at the end of 2022 to 1.07 per cent at the end of the second quarter of 2023, while the bad debt coverage ratio decreased from 125 per cent at the end of last year to 115.8 per cent.
 
For State-owned commercial banks, although they have not officially announced their financial statements, their business performance results in the first half of 2023 have been revealed partly.
 
VietinBank’s deputy general director Nguyễn Hoàng Dũng said the bad debt ratio was controlled at 1.1 per cent and met the bank’s plan, while the NPL coverage ratio also continued to remain high at 170 per cent.
 
At Vietcombank, general director Nguyễn Thanh Tùng revealed by the end of June 2023, the bank’s credit quality was controlled with a bad debt ratio at 0.85 per cent. Although the ratio was the lowest level in the country’s banking system, it increased compared to Vietcombank's rate of 0.68 per cent at the end of 2022.
 
As for Agribank, the bad debt ratio increased again due to domestic and global economic headwinds though it reduced from 8.1 per cent to 1.86 per cent after restructuring in the 2016-20 period.
 
Phạm Đức Ấn, chairman of Agribank's board of members, said Agribank's bad debt ratio as of June 30, 2023 increased to exactly the same as the end of the restructuring in the 2016-20 period, and the ratio is under rising pressure in the coming time.
 
Having faced the fact that bad debts are getting bigger and bigger, banks have aggressively auctioned to sell collateral to recover the debts, but the work is not easy.
 
For example, at Vietcombank, the collateral of an Evergreen Technology Company’s debt, including land use rights and machinery systems, at the bank has been put up for auction many times over the past year but has not found buyers, though the price dropped by more than VNĐ300 billion compared to the initial price.
 
Nguyễn Quốc Hùng, general secretary of the Việt Nam Banks Association, said the debt recovery has faced many difficulties, such as the frozen real estate market.
 
According to experts, this is not the peak of bad debt because payment of many debts are still reschedued according to a circular by the State Bank of Vietnam.
 
When the circular expires on June 30 next year, the actual number of bad debts must be higher.
 
Banking expert Dr. Cấn Văn Lực said the increase in bad debt is a common trend of the world in the current difficult context. Though bad debts increase compared to 2022, it is still under control. In order to reduce the burden of rising bad debts in the future, banks are still actively setting up provisions for higher risk cases.
 
According to Lực, Circular 02/2023/TT-NHNN from SBV requires banks to make provisions for risky debts to ensure that they will be still settled even in the worst scenarios.
 
Though the bad debt coverage ratio out of the total outstanding loans of the economy is currently at 135 per cent, not as high as a few years ago, it is still an important resource for banks to handle bad debts. — VNS
 
Read original article here
Newer News
23/02 Banks ask central bank to extend June 30 payment deadline
21/02 Credit growth declines by 0.6% in first month of 2024
19/02 Foreign exchange rate forecast to be under control in 2024
19/02 Many people buy gold on God of Wealth Day, gold prices down
16/02 Changes to Law on Credit Institutions reduce ownership limits in banks
16/02 Central bank pushes others to boost lending from start of New Year
16/02 Asia - biggest source of overseas remittances to HCM City in 2023
27/12 Bank bad debts forecast to remain under great pressure in 2024
27/12 Domestic gold prices hit record-breaking VNĐ80 million per tael
23/12 Bank credit growth improves in HCM City
Older News
08/08 Corporate bond market hoped to develop sustainably
26/07 Corporate bond market to continue to face headwinds in H2
25/07 Vietnamese banks prove attractive to foreign investors
25/07 Banks’ bond buybacks might affect credit growth in H2 2023
25/07 Remittances to HCM City up 37 per cent in H1, likely to hit $7 billion this year
25/07 VAFI recommends building risk-free bonds
24/07 VCB: Vietcombank sets record market cap
24/07 Việt Nam, US promote further financial cooperation
24/07 Profit growth of banking industry forecast to slow in 2023
18/07 Deputy PM: banks consider solving financial difficulties of seafood businesses
 
Newsletter Signup
Top Stories
VN-Index fails to sustain upward momentum despite multiple attempts
Market remains upbeat on large-cap stocks
Central bank pushes others to boost lending from start of New Year
Domestic gold prices hit record-breaking VNĐ80 million per tael
Market steady due to low risk appetite
Market Update
Last updated at 12:34:59 PM
VN-INDEX 1,215.85 +3.85/+0.32%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Portfolio
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.