Bad debts remain a challenge for banks in Q4 2022

Besides interest and exchange rates, non-performing loans (NPLs) are also a concern for banking activities in the remaining months of 2022, experts have warned.

bad debts remain a challenge for banks in q4 2022 picture 1
At a transaction desk of Sacombank.

According to the World Bank (WB), if including potential NPLs from restructured debts, the number of NPLs in the Vietnamese banking system is not low and must be continuously monitored.

The State Bank of Vietnam (SBV) last year issued Circular No. 14/2021/TTNHNN. Under the circular, the SBV told banks to reschedule debt repayments to help customers affected by the COVID-19 pandemic until June 30 this year. The circular also allowed banks to keep the debt classification for COVID-19 borrowers unchanged.

According to SBV’s statistics, by late April this year, total accumulated scheduled loans hit VND695 trillion, and 1.1 million borrowers benefited from the incentive policy.

In fact, the ratio of NPLs on the balance sheet at commercial banks has continued to increase since the end of 2020. Until June 30 this year, the total NPLs of 28 listed banks were about VND122 trillion, an increase of nearly 11% compared to the end of the first quarter and nearly 20% compared to the beginning of 2022.

Experts forecast the NPLs of banks may continue to increase when Circular No. 14/2021/TT-NHNN expired on June 30 this year. When not being extended, many debts will have to be listed in worse debt groups if customers do not pay their debts on time, which will cause NPLs to increase.

In the context of rising potential NPLs and limited capital supply to the economy in the coming period, SBV Governor Nguyen Thi Hong has recently issued Document No. 5962 requesting the Vietnam Asset Management Company, Vietnamese and foreign banks to continually handle bad debts according to Resolution No. 42/2017/QH14, which includes accelerating the handling of NPLs and collaterals of bad debts; and proactively and actively coordinating with police, tax and court agencies at all levels and other relevant agencies to effectively implement policies dealing with NPLs, such as seizing collateral and applying shortened procedures in disputes related to collateral at courts.

Banks have been also very enthusiastic about the handling of collateral assets and debt recovery. They have continuously promoted the sale of NPLs’ collateral. Sacombank, for example, has recently announced it will continue to auction 19 apartments of the Xi Grand Court project while BIDV will also put for auction 1ha of land in Chon Thanh Industrial Park and many assets attached to the DIC Binh Phuoc cement factory with a starting price of VND31.85 billion. Previously, BIDV announced an auction of the debts of two other companies with outstanding loans of VND940 billion.

However, the sale of real estate collateral has encountered many difficulties although banks have actively advertised on media and lowered prices. For example, Sacombank has to drastically reduce the price of 19 apartments in the Xi Grand Court project from VND100.8 billion to VND79 billion. These apartments were put for sale for the first time in July 2020, but after two years, Sacombank could not sell any apartments and had to reduce prices sharply.

Can Van Luc, chief economist of BIDV, said that the sale of real estate collateral assets is facing difficulties because the realty market is quiet with liquidity dropping sharply.

OCB General Director Nguyen Dinh Tung also admitted the settlement of bad debts is currently more difficult than in the previous period. Currently, although borrowers want to sell their real estate as mortgages to pay debts to banks, it is difficult to find buyers because of the poor realty market liquidity. Therefore, bad debt settlement at banks is slower.

Besides, Luc suggested streamlining Resolution No. 42/2017/QH14 to better deal with bad debts.

“One of the major problems when dealing with bad debts currently is the handling of collateral. A credit institution's right to seize collateral assets is one of the key contents in Resolution 42, but it does not specify regulations when the borrowers do not cooperate. Therefore, it is necessary to have a law on bad debt settlement with a stronger legal framework,” he said.

Lawyer Truong Thanh Duc, director of ANVI Law Firm, also said Resolution 42 has a good effect in dealing with bad debts. However, the policy still needs to be further streamlined to improve the handling of bad debts in the banking industry.

Source: VIR
english.vov.vn

Related News

Bad debt at banks continues to rise in both amount and ratio

Bad debt at banks continues to rise in both amount and ratio

VCN - After nine months of 2024, bad debt balances at banks continue to rise, potentially posing risks to the banking sector if control measures aren't implemented.
Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
More efficient thanks to centralized payments between the State Treasury and banks

More efficient thanks to centralized payments between the State Treasury and banks

VCN - The State Treasury (KBNN) is continuing to maintain the stable operation of payment systems within the KBNN system and payments with banking systems to ensure smooth, timely and safe operations.
Allocating credit room, motivation for banks to compete

Allocating credit room, motivation for banks to compete

VCN - The State Bank of Vietnam (SBV) has announced that it will allocate the credit growth limit (room) for banks that have achieved 80% of their target. This is an incentive for banks to increase their competitiveness.

Latest News

Ensuring financial capacity of bonds issuers

Ensuring financial capacity of bonds issuers

VCN - The Ministry of Finance is finalizing the draft Decree amending and supplementing Decree No. 155/2020/ND-CP detailing the implementation of a number of articles of the Securities Law. The amendment aims to continue to perfect the legal framework and overcome some shortcomings arising in the practice of the securities market.
Finance ministry announces five credit rating enterprises

Finance ministry announces five credit rating enterprises

One more company has been granted the certificate of eligibility since August.
The capital market will see positive change

The capital market will see positive change

VCN – Vietnam’s capital market has more balanced, harmonious and sustainable. However, besides the achievements, the market still faces many potential challenges. In order for the capital market to become an effective and sustainable capital mobilization channel, further improving the quality of goods and diversifying investors in the market is a key direction.
Corporate bond issuance value rises by 60 per cent

Corporate bond issuance value rises by 60 per cent

In the first 11 months of 2024, the total value of corporate bond issuances reached nearly VNĐ403 trillion, a 60 per cent increase year-on-year.

More News

Slower mobilization than credit may put pressure on interest rates

Slower mobilization than credit may put pressure on interest rates

VCN - According to the latest data from the State Bank of Vietnam (SBV), deposits in the banking system as of the end of September 2024 reached more than 14 million billion VND, an increase of 4.9% compared to the beginning of the year, but the rate was still slower than credit, which could put pressure on interest rates.
Fed’s foreseen rate cuts affect foreign exchange rate

Fed’s foreseen rate cuts affect foreign exchange rate

After the Fed’s move, the US dollar index (DXY) on December 19 hit nearly 108, the highest level in the past year.
Untying the knot for green finance

Untying the knot for green finance

VCN - Green finance is a crucial resource for greening businesses. Completing the policy framework for green finance is urgently needed to unlock this capital flow.
Ensuring efficiency and transparency in use and management of houses and land at State enterprises

Ensuring efficiency and transparency in use and management of houses and land at State enterprises

VCN - According to the Ministry of Finance, the issuance of Directive on strengthening management, improving the efficiency of use and handling of houses and land at State-owned enterprises to ensure the effective management, use and handling of houses and land for the right purposes, and to avoid loss and waste.
Vietnam

Vietnam's stock market to develop strongly and sustainably

VCN - This was emphasized by Minister of Finance Nguyen Van Thang at the Conference to review the work of 2024 and deploy the work of 2025 of the State Securities Commission (SSC) held on the afternoon of December 18.
Tax sector achieves revenue target of about VND1.7 million billion

Tax sector achieves revenue target of about VND1.7 million billion

VCN – Motivated by the revenue collection by the end of December 2024, the General Department of Taxation has accomplished the revenue collection.
General inventory of public assets raises efficiency of use and management of country

General inventory of public assets raises efficiency of use and management of country's resources

VCN – The implementation of the General Inventory Project by the Ministry of Finance, ministries, central and local agencies has ensured progress according to Project 213 and the plan issued by the Ministry of Finance. This is the information provided by a representative of the Department of Public Asset Management (Ministry of Finance) at the press conference on the implementation of the General Inventory Project of public assets organized by the Ministry of Finance on the afternoon of December 18.
Publicizes progress of public investment disbursement for important national projects

Publicizes progress of public investment disbursement for important national projects

VCN – Important national projects, inter-regional transport projects, riverbank and coastal erosion treatment projects all have disbursement rates lower than the estimated average disbursement rate of the whole country, the Ministry of Finance said.
Six SOEs to be transferred back to industry ministry

Six SOEs to be transferred back to industry ministry

Six State–owned enterprises (SOEs) with a total State stake of 800 trillion VND (31.5 billion USD) will be transferred back to the Ministry of Industry and Trade (MoIT) after six years under the management of the Commission for the Management of State Capital at Enterprises (CMSC).
Read More

Your care

Latest Most read
Ensuring financial capacity of bonds issuers

Ensuring financial capacity of bonds issuers

VCN - The Ministry of Finance is finalizing the draft Decree amending and supplementing Decree No. 155/2020/ND-CP detailing the implementation of a number of articles of the Securities Law. The amendment aims to continue to perfect the legal framework and
Finance ministry announces five credit rating enterprises

Finance ministry announces five credit rating enterprises

One more company has been granted the certificate of eligibility since August.
The capital market will see positive change

The capital market will see positive change

VCN - The capital market is an important component of the financial market that provides medium-and long-term capital, contributing to effectively mobilizing and allocating resources and creating an essential material foundation for the grow of national e
Corporate bond issuance value rises by 60 per cent

Corporate bond issuance value rises by 60 per cent

In the first 11 months of 2024, the total value of corporate bond issuances reached nearly VNĐ403 trillion, a 60 per cent increase year-on-year.
Slower mobilization than credit may put pressure on interest rates

Slower mobilization than credit may put pressure on interest rates

According to the latest data from the State Bank of Vietnam (SBV), deposits in the banking system as of the end of September 2024 reached more than 14 million billion VND
Mobile Version