SBV: No worries about bad debts
By Hai Ly - The Saigon Times Daily
HCMC – The State Bank of Vietnam (SBV) said on Thursday the bad debt situation in the banking system is not as bad as feared by the public.
Nguyen Huu Nghia, head of banking inspection and supervision at the SBV, told a press briefing that bad debt in Vietnam is lower than in other regional countries.
There are two elements helping minimize damages caused by bad debts for lenders, he noted. First, the VND67.3 trillion risk provisions in the banking system are equivalent to 57.18% of the total bad debts. Second, most of the bad debts are guaranteed by collateral and they are recoverable.
Nghia cited two figures, one of which is the bad debt ratio, 4.47%, equivalent to VND117 trillion based on the reports by local lenders as of end-May, and the other is 8.6%, or VND202 trillion as recorded by the inspection agency.
Nghia explained the gap between the two figures is due to three reasons: first, the different criteria are used to classify bank loans; second, some credit institutions deliberately lower actual figures; and finally, the different classifications of debts owed by a customer who has credit relationships with multiple banks.
Nghia said the balance of outstanding loans for the real estate sector by end-May had amounted to VND197 trillion, with bad loans put at only VND12 trillion, and outstanding securities loans at nearly VND12 trillion, with bad loans at VND485 billion.
These figures are very small, he asserted.
“Bad debts are mainly in construction and industrial manufacturing areas which have been adversely affected by poor consumption and the stagnant property market,” Nghia said.
Regarding the scheme to set up an asset management companies (AMC), he said, such a project is still under consideration and there is no need to use up to VND100 trillion to tackle bad debts at banks as the central bank will do the job via financial tools.