Banks must handle a large amount of bad debts this year. (Photo: VNA)Hanoi (VNS/VNA) - Somebanks are speeding up the recovery of non-performing loans (NPLs) this yeardespite the impacts of the COVID-19 pandemic.
AnBinh Commercial Joint Stock Bank(ABBank) said the bank aimed to reach 1.3 trillion VND (56.52 million USD) in pre-tax profit and clear all baddebt kept at VietnamAsset Management Company (VAMC) this year. It also expected to increase theprovision for risky loans this year by 69 percent against 2019 to some 837 billion VND, the tinnhanhchungkhoan.vn reported.
Undera State Bank of Vietnam(SBV) policy, the SBV-controlled VAMC agreed to buy bad debts ofcommercial banks and recover the debts to reduce the bad debt ratio of theentire banking system in 2015. At that time, many banks had to sell bad debtsto VAMC so they could take the debts off their balance sheet to have a bad debtratio of below 3 percent as required by the central bank.
Afterbuying the bad debts, the VAMC tried to recover the debt, but some debtshaven't been settled to date. Banks, therefore, would have to receive back the debts from the VAMC in 2020, accordingto the SBV's policy.
Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank)general director Nguyen Duc Thach Diem said that Sacombank still has NPLs worth more than 25 trillion VND at the VAMC, so the bank is trying to handle and recover all thedebts.
Diem said Sacombank aims to handle 11 trillion VND of bad debts this year. As the banksuccessfully auctioned 9.7 trillion VND of debts in thefirst five months of this year, it expects to meet the target by the end of thisyear.
However,Sacombank’s representative said the pandemic has hampered the bank’s handling of bad debts.
AtVietnam Export Import Commercial Joint Stock Bank (Eximbank), the bank’s baddebt ratio was at 1.62 percent by the end of 2019 and it is speeding up thesettlement of bad debts to soon clear all its bad debts kept at the VAMC.
Eximbankstill holds VAMC’s special bonds worth about 3.2trillion VND by the end of 2019. With aprovision of nearly 2.1 trillion VND forthe bonds to date, the bank will need an addition of 1.1 trillion VND to clear all debts at the VAMC.
ThoughEximbank plans to settle all the debts keptat the VAMC this year, the target might be affected due to the COVID-19pandemic.
Ina report on impacts of the COVID-19 pandemic released recently, financialdatabase platform FiinPro estimated the ratio of new bad debt arising in the first quarter this year of 18 bankslisted on stock exchanges was 0.23 percent, increasing from the previous sevenquarters and equivalent to the rate of the first quarter of 2018.
Bythe end of the first quarter this year, the bad debt ratio of the banks was1.65 percent, up 1.44 percent compared to the end of 2019. However, the risedidn’t reflect all the impacts of the COVID-19 pandemic as the central bank inQ1 issued new regulations on allowing commercial banks to restructure the debtsof pandemic-affected borrowers./.
VNA
