Illustrative image (Photo: Sacombank) According to the World Bank (WB), if including potential NPLs from restructureddebts, the number of NPLs in the Vietnamese banking system is not low and mustbe 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 tohelp customers affected by the COVID-19 pandemic until June 30 this year. Thecircular also allowed banks to keep the debt classification for COVID-19borrowers unchanged.
According to SBV’s statistics, by late April this year, total accumulatedscheduled loans hit 695 trillion VND, and 1.1 million borrowersbenefited from the incentive policy.
In fact, the ratio of NPLs on the balance sheet at commercial banks hascontinued to increase since the end of 2020. Until June 30 this year, the totalNPLs of 28 listed banks were about 122 trillion VND, an increase of nearly 11%compared to the end of the first quarter and nearly 20% compared to thebeginning 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, manydebts will have to be listed in worse debt groups if customers do not pay theirdebts on time, which will cause NPLs to increase.
In the context of rising potential NPLs and limited capital supply to the economyin the coming period, SBV Governor Nguyen Thi Hong has recently issuedDocument No. 5962 requesting the Vietnam Asset Management Company, Vietnameseand foreign banks to continually handle bad debts according to Resolution No.42/2017/QH14, which includes accelerating the handling of NPLs and collateralsof bad debts; and proactively and actively coordinating with police, tax andcourt agencies at all levels and other relevant agencies to effectivelyimplement policies dealing with NPLs, such as seizing collateral andapplying shortened procedures in disputes related to collateral at courts.
Banks have been also very enthusiastic about the handling of collateral assetsand debt recovery. They have continuously promoted the sale of NPLs’collateral. Sacombank, for example, has recently announced it will continue toauction 19 apartments of the Xi Grand Court project while BIDV will also putfor auction 1ha of land in Chon Thanh Industrial Park and many assets attachedto the DIC Binh Phuoc cement factory with a starting price of 31.85 billion VND.Previously, BIDV announced an auction of the debts of two other companies withoutstanding loans of 940 billion VND.
However, the sale of real estate collateral has encountered manydifficulties although banks have actively advertised on media and loweredprices. For example, Sacombank has to drastically reduce the price of 19apartments in the Xi Grand Court project from 100.8 billion VND to 79 billionVND. These apartments were put for sale for the first time in July 2020, butafter two years, Sacombank could not sell any apartments and had to reduceprices sharply.
Can Van Luc, chief economist of BIDV, said that the sale of real estatecollateral assets is facing difficulties because the realty market isquiet with liquidity dropping sharply.
OCB General Director Nguyen Dinh Tung also admitted the settlement of bad debtsis currently more difficult than in the previous period. Currently, althoughborrowers want to sell their real estate as mortgages to pay debts to banks, itis 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 betterdeal with bad debts.
“One of the major problems when dealing with bad debts currently is thehandling of collateral. A credit institution's right to seize collateral assetsis one of the key contents in Resolution 42, but it does not specifyregulations when the borrowers do not cooperate. Therefore, it isnecessary to have a law on bad debt settlement with a stronger legalframework,” he said.
Lawyer Truong Thanh Duc, director of ANVI Law Firm, also said Resolution 42 hasa good effect in dealing with bad debts. However, the policy still needsto be further streamlined to improve the handling of bad debts inthe banking industry./.
VNA
