Banks will need more provisional fundsto support the risk of non-performing loans (NPLs) in accordance withnational requirements for controlling bad debts, reported Dau tu(Vietnam Investment Review) online.
Asia Commercial Bank GeneralDirector Do Minh Toan said his bank targeted credit growth of 13-15percent and a bad debt ratio of below 3 percent this year and hadarranged a provisional fund of some 2 trillion VND (95.24 million USD)for 2015.
This year, the bank planned to sell 1 trillion VND(47.62 million USD) of NPLs to the Vietnam Asset Management Company(VAMC) and handle 1.6 trillion VND (76.19 million USD) in bad debts byitself, he added.
Sai Gon Joint Stock Commercial Bank reportedthat it had sold 11.4 trillion VND (542.86 million USD) in NPLs to theVAMC over the last three years, reducing its bad loan ratio to 0.5percent by the end of last year.
The bank said it would have tocontinue to deal with NPLs to improve its financial situation, andprovisional funds were likely to be increased.
VietnamInternational Bank also said it would establish a provisional fund ofmore than 2 trillion VND (95.24 million USD), though it had held its baddebt ratio at 2.51 percent in 2014.
The bank expected itsdeposits to grow by 8 percent to 53 trillion VND (2.52 billion USD) andoutstanding loans to increase by 11 percent to 42.38 trillion VND (2.02billion USD) this year.
It planned to resolve some 3.84 trillionVND (182.86 million USD) in NPLs, predicting provisional funds wouldrise sharply, with bad debts likely to climb by 300 billion VND (14.28million USD) in 2015.
Eximbank leaders said establishingprovisional funds was a prerequisite for guaranteeing operationalsecurity; hence, it was willing to sacrifice profits to provisions. In2014, a provisional fund amounting to 3 trillion VND (142.86 millionUSD) resulted in a pre-tax profit as low as 68 billion VND (3.24 millionUSD) for the bank.
The bank planned to sell some 1 trillion VND worth of bad debts to the VAMC this year, they added.
TheState Bank of Vietnam (SBV) has urged credit institutions to step upbad debt resolution since January in a bid to reduce the overall NPLratio in the domestic banking system to less than 3 percent in 2015,following Government orders.
The lenders have to resolve by June30 at least 60 percent of the total number of bad loans they aresupposed to handle in 2015. They have to transfer at least 75 percent ofthe total debts they will register for sale to VAMC this year, withinthe same deadline. The deadline for selling all their NPLs is September30.
The SBV has allowed the VAMC to issue special bonds, worth upto 80 trillion VND (3.76 billion USD), to acquire bad loans from creditinstitutions this year. The central bank also required lenders toestablish yearly provisional funds amounting to 20 percent of the valueof the bonds they had bought from the company.
Tran Du Lich, amember of the National Financial and Monetary Policy Advisory Council,said selling NPLs to the VAMC was a good way for banks to clean up theiraccounting balances, but the requirement for provisions would createsignificant pressure for them.-VNA
Asia Commercial Bank GeneralDirector Do Minh Toan said his bank targeted credit growth of 13-15percent and a bad debt ratio of below 3 percent this year and hadarranged a provisional fund of some 2 trillion VND (95.24 million USD)for 2015.
This year, the bank planned to sell 1 trillion VND(47.62 million USD) of NPLs to the Vietnam Asset Management Company(VAMC) and handle 1.6 trillion VND (76.19 million USD) in bad debts byitself, he added.
Sai Gon Joint Stock Commercial Bank reportedthat it had sold 11.4 trillion VND (542.86 million USD) in NPLs to theVAMC over the last three years, reducing its bad loan ratio to 0.5percent by the end of last year.
The bank said it would have tocontinue to deal with NPLs to improve its financial situation, andprovisional funds were likely to be increased.
VietnamInternational Bank also said it would establish a provisional fund ofmore than 2 trillion VND (95.24 million USD), though it had held its baddebt ratio at 2.51 percent in 2014.
The bank expected itsdeposits to grow by 8 percent to 53 trillion VND (2.52 billion USD) andoutstanding loans to increase by 11 percent to 42.38 trillion VND (2.02billion USD) this year.
It planned to resolve some 3.84 trillionVND (182.86 million USD) in NPLs, predicting provisional funds wouldrise sharply, with bad debts likely to climb by 300 billion VND (14.28million USD) in 2015.
Eximbank leaders said establishingprovisional funds was a prerequisite for guaranteeing operationalsecurity; hence, it was willing to sacrifice profits to provisions. In2014, a provisional fund amounting to 3 trillion VND (142.86 millionUSD) resulted in a pre-tax profit as low as 68 billion VND (3.24 millionUSD) for the bank.
The bank planned to sell some 1 trillion VND worth of bad debts to the VAMC this year, they added.
TheState Bank of Vietnam (SBV) has urged credit institutions to step upbad debt resolution since January in a bid to reduce the overall NPLratio in the domestic banking system to less than 3 percent in 2015,following Government orders.
The lenders have to resolve by June30 at least 60 percent of the total number of bad loans they aresupposed to handle in 2015. They have to transfer at least 75 percent ofthe total debts they will register for sale to VAMC this year, withinthe same deadline. The deadline for selling all their NPLs is September30.
The SBV has allowed the VAMC to issue special bonds, worth upto 80 trillion VND (3.76 billion USD), to acquire bad loans from creditinstitutions this year. The central bank also required lenders toestablish yearly provisional funds amounting to 20 percent of the valueof the bonds they had bought from the company.
Tran Du Lich, amember of the National Financial and Monetary Policy Advisory Council,said selling NPLs to the VAMC was a good way for banks to clean up theiraccounting balances, but the requirement for provisions would createsignificant pressure for them.-VNA
