Credit institutions recover US$251 million of bad debts each month

SBV Deputy Governor Nguyen Thi Hong presides over the press briefing.

The information was released by the State Bank of Vietnam (SBV) during a June 13 press conference briefing participants on the outstanding results of the banking sector during the first half of the year.

Nguyen Quoc Hung, head of the SBV’s Credit Department, said that by June 10, the total outstanding loans rose by 5.75 per cent in comparison with the end of 2018. Credit was being increasingly allocated for prioritized production and business fields as directed by the Government. The control of loans to risky business sectors was also tightened.

Hung added that after nearly two years of implementing the National Assembly’s Resolution 42/2017/QH14 on the pilot settlement of bad debts of credit institutions (Resolution No. 42), the banking sector has reaped a number of positive outcomes on curbing bad debts while leveraging credit institutions to rearrange their operations and tackle bad debts as well.

Nationwide credit institutions settled VND907 trillion (US$39.33 billion) between 2012 and March 2019. As for 2018, as much as VND163 trillion (US$7.06 billion) in bad debts was handled. The bad debt ratio stood at 2.02 per cent by late March this year.

Since the implementation of Resolution No.42 between August 15 2017 and the end of March 2019, the banking sector settled an average of VND5.8 trillion (US$251.52 million) per month, far higher than the VND4 trillion (US$173.46 million) level of the 2012-17 period.

Nguyen Thi Hong, SBV Deputy Governor, said that in the near future, the central bank would continue to carry out a scheme to restructure credit institutions as a means of bettering their bad debt settlement by 2020, with a particular focus on tackling poor-performing ones.

Attempts are to be made to realize efficiently Resolution No.42, handle debts in accordance with market mechanisms, as well as curb the internal bad debt ratio below 2 per cent, the deputy governor stressed.