Vietnam - Black mark for banks’ lending

September 28, 2011



Black mark for banks’ lending




Bad debts are hurting banks’ ambitions. State Bank statistics show that local banking sector’s bad debts made up 3.04 per cent in total outstanding loans by the end of July 2011 against 2.16 per cent in late 2010.




The bank’s Hanoi branch office figures showed bad debts occupied 2.05 per cent of total outstanding loan balance, surging 0.18 per cent against the end of 2010. State-owned commercial banks saw bad debts rising 0.4 per cent and joint stock banks’ bad debts advancing 0.05 per cent in amount by late August 2011.


Bad debts amounted to VND23.953 trillion ($1.15 billion) at Agribank as of June 30, 2011 in the total VND419.438 trillion ($20.26 billion) outstanding loan balance.


Outstanding loans exceeded VND191.589 trillion ($9.25 billion) at Vietcombank in the year ending June 2011 with fifth-group debts reaching VND3.732 trillion ($180.2 million), tantamount to 1.94 per cent.


Ho Chi Minh City-based Sacombank kept its overdue debts at 0.675 per cent and bad debts at 0.4 per cent as of August 9, 2011, according to the bank’s chairman Dang Van Thanh.


Thanh said the bank’s outstanding loans hiked 4.6 per cent and deposits up 3.8 per cent in late August 2011 against the end of 2010.


“The bank’s top target is maintaining sustainable credit growth, so that we will not strive to push up lending by all means in this current difficult market,” Thanh added.


“At this point of time the bank puts credit quality at top importance. Therefore, we just lent to customers with viable production and trading projects and healthy finance to address bad debts,” said DongA Bank general director Tran Phuong Binh.


Ho Chi Minh City-based HD Bank reported VND39.923 trillion ($1.92 billion) in deposits in 2011’s first half which was doubled that on-year and kept bad debts at less than 1.39 per cent of total outstanding loan balance.


Banking sector’s bad debts came to around VND75 trillion ($3.62 billion) in the year ending June, a 50 per cent jump on-year, with fifth-group debts occupying 47 per cent of total, according to National Financial Supervisory Committee deputy chairman Dr. Le Xuan Nghia.


Industry experts said banks should be cautious with lending to minimise risks in the face of rising inflation and an unstable macroeconomy.



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