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Banking & Finance

Bad debts under better control

Released at: 08:15, 24/08/2015

Bad debts under better control

Bad debts fall by $14.1 billion since last September and are now being properly tallied by credit institutions.

by Hoai An- Minh Duc

The State Bank of Vietnam has updated the non-performing loan (NPL) situation of credit institutions as at June 30, 2015. 

Total outstanding credit stood at VND4.282 trillion ($201 billion), growth of 7.86 per cent compared to the end of 2014.

The NPL ratio fell slightly, to 3.72 per cent from 3.81 per cent at the end of March but rose 0.23 per cent compared to January.

According to the SBV, from March 2015 bad debt figures reported by credit institutions were more accurate and closer to the central bank’s monitoring data. The reason for this is that credit institutions have made reference to classifications for each customer debt from the Credit Information Center, according to the provisions of Circular No. 02 and Circular No. 09.

The NPL ratio of 3.72 per cent by the end of June 2015 therefore reflects the actual level of credit quality compared to previously reported figures. The total amount of bad debt as at June was VND159 trillion ($7.5 billion).

Compared to September 2012, when the SBV fully recognized bad debts in order to establish a scheme for settlement, the scale of bad debt has fallen sharply, by VN301 trillion ($14.1 billion).

However, initial parts of bad debts have been sold to the Vietnam Asset Management Company, with a cumulative amount of VND158 trillion ($7.4 billion) as at June 30.

In addition, risk provisions reached VND89 trillion ($4.2 billion).

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