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Reducing debt burden

09:46 | 18/09/2021

VCN - In the midst of the pandemic, many businesses are making efforts to repay trillions of dong of debt that is a bright spot in the picture of listed companies' debt.

Many enterprises have been mistrusted about their uninterrupted operation ability Many enterprises have been mistrusted about their uninterrupted operation ability
State Bank agrees to extend debt rescheduling for six months State Bank agrees to extend debt rescheduling for six months
Businesses looking forward to lower interest rates due to heavy debt burden Businesses looking forward to lower interest rates due to heavy debt burden
Reducing debt will help businesses reduce their burden during the pandemic. Photo: ST
Reducing debt will help businesses reduce their burden during the pandemic. Photo: ST

Paying off debt

The most impressive debt repayment effort since the beginning of the year is Hoang Anh Gia Lai Joint Stock Company (HAG). According to the consolidated financial statements for the second quarter of 2021, the total loan balance at the end of June 2021 was nearly VND8,300 billion, down nearly VND10,000 billion compared to the beginning of the year. In which, short-term loan balance dropped sharply from VND8,772 billion to VND1,485 billion. Long-term loan balance also decreased by 27% to VND6,794 billion.

In which, HAG has finished paying off debt of VND5,123 billion of Truong Hai Agriculture Joint Stock Company; VND1,231 billion long-term loans at BIDV and two short-term loans at HDBank and TPBank with a total outstanding loan of VND1,200 billion. In a recent letter to shareholders, HAGL Chairman Doan Nguyen Duc said that the financial restructuring of the company has been completed, the group's debt situation has decreased significantly. Currently, only BIDV's bond debt remains, the group has a plan to liquidate some non-profitable assets, focus on debt collection from related parties and use the cash flow from business and production activities to complete repayment of this bond before the end of 2025.

According to the notes to the consolidated financial statements, BIDV's bond debt is worth VND5,876 billion, due to be settled on December 30, 2026. In addition, there are two bond debts of TPBank and ACB Securities Company worth VND350 billion and VND300 billion, the deadline for settlement is October 28, 2024 and June 18, 2023, respectively.

Recently, Phat Dat Real Estate Joint Stock Company (PDR) also announced that, as of July 10, the total debt of enterprises was just under VND1,260 billion. In the second quarter of 2021, PDR has paid VND1,283 billion of short-term loans, including VND521 billion borrowed from Vietnam New Urban Center LP Fund, VND350 billion borrowed from banks and domestic organizations, and repurchase VND405 billion of bonds and fulfilled financial obligations for all issued bonds in 2019-2020.

As a result, PDR's short-term loans decreased to about VND350 billion on July 10. For long-term loans, outstanding loans on July 10, 2021 are VND905 billion, of which VND680 billion are issued in 2021, the rest is for investment in building the company's office.

PDR also said that on the company's financial statements, there are long-term payables of VND5,547 billion related to two transferred projects, The EverRich 2 and The EverRich3, which are not actually debts of PDR, because of these two projects, the company has transferred, received enough money and handed over all responsibilities and interests to partners to continue investing and doing business from 2019.

After the legal procedures are completed according to the law, this amount will be recognized in revenue, and The EverRich 2 and The EverRich 3 projects are no longer included in PDR's inventory and liabilities structure.

For the Vietnam Rubber Group, it has also reduced VND1,513 billion of short-term debt and VND552 billion of long-term debt; total debt of Hoa Binh Construction Group Joint Stock Company (HBC) also decreased by VND580 billion, equivalent to 11% compared to the beginning of the year, to VND4,538 billion; Saigon Thuong Tin Real Estate Joint Stock Company (SCR) reduced its total debt by 21% compared to the beginning of the year, to VND2,205 billion.

Despite facing a series of difficulties due to the pandemic, businesses paying off large debts shows great efforts in financial health. Thereby it helped to significantly reduce loan interest costs for businesses.

Specifically, in the second quarter of 2021, HAG's interest expense decreased by VND60 billion compared to the second quarter of 2020. The accumulated interest expenses in the first six months of 2021 decreased by a total of VND127 billion. This has contributed to a significant improvement in the company's business results with a net profit of VND18 billion in the first half of this year, while a loss of nearly VND1,400 billion in the same period last year. Similarly, HBC's interest expense also decreased by VND15 billion, Vietnam Rubber Group's decreased by VND155 billion.

Bank pledges to cut loan interest

In the future, it is forecasted that the interest expense of businesses will be further relieved by the banking industry's support and interest rate reduction policies to support businesses affected by the Covid-19 pandemic.

According to SBV’s Deputy Governor Dao Minh Tu, in 2020, the interest rate of the whole banking system will decrease by an average of 1.2 - 1.5%/year. In the first seven months of 2021, interest rates continued to decrease by about 0.5%. Recently, sixteen banks pledged to cut more than VND20,000 billion in loan interest to further reduce interest rates.

Typically, BIDV reduced 0.5-1.5% per year the lending interest rate in VND for existing outstanding loans arising until July 15 for businesses whose production and business activities faced difficulties due to the Covid-19 pandemic; at the same time deploying a new credit package with a scale of VND30,000 billion with an interest rate reduction of up to 1.5% per year compared to the normal interest rate. BIDV expects the total budget to support this phase at VND1,000 billion. Previously, in the first seven months of 2021, BIDV supported to reduce interest rates for corporate customers in nineteen southern provinces and cities by about VND500 billion. Therefore, the total resources of BIDV to support customers in 2021 is expected to be VND1,500 billion.

Vietcombank is implementing a policy of reducing interest rates by 0.5 - 1% per year for customers affected by the pandemic from July 15 to the end of 2021, the support scale is VND1,800 billion. In addition, from August 18, the bank will continue to reduce loan interest rates from 0.3-0.5% for customers in nineteen southern provinces and cities that are applying social distancing under Directive 16.

The other banks such as VPBank, ACB, Techcombank, also offer interest rate support packages with a reduction of 0.5 - 1.5% per year for existing and new loans of corporate customers.

Ensuring the implementation of interest rate reduction of banks, the State Bank has issued a dispatch confirming that it will supervise the implementation of the commitment to reduce interest rates and reduce fees of banks, at the same time consider policies to encourage or restrict some contents in the bank's credit activities by 2022.

By Khai Ky/ Quynh Lan