Credit institutions settled more than 204.4 trillion VND (8.77 billion USD) of non-performing loans (NPLs) by the end of the first quarter of 2019 (Photo: VNA)Hanoi (VNA) - Credit institutionsin Vietnam settled more than 204.4 trillion VND (8.77 billion USD) ofnon-performing loans (NPLs) by the end of the first quarter this year, saidNguyen Thi Hong, Deputy Governor of the State Bank of Vietnam (SBV).
The bad debts accounted for 40.1 percent of thetotal, Hong said.
The SBV report also showed banks handled 149.22trillion VND (6.37 billion USD) of NPLs last year.
The central bank will focus on bad debtsettlement this year to reduce the NPL ratio of the entire banking system,including NPLs sold to the Vietnam Asset Management Company (VAMC), from 6.6 percentat the end of 2018 to below 5 percent by the end of this year.
The development strategy for the banking sectorto 2025, approved in August last year, also targets reducing the ratio of baddebts to below 3 percent of outstanding loans by 2020.
To meet the target, SBV Governor Le Minh Hunghas asked credit institutions to review and provide detailed roadmaps andsolutions for settling their bad debts each year until 2022.
Credit institutions have also been asked to lookfor buyers for the debts they sold to the VAMC, while the VAMC has been askedto speed up the handling of bad debts and collateral the company purchasedfollowing market-based mechanisms.
The SBV has also issued regulations and policiesin line with international practices to improve safety standards in banking,which has contributed to stronger governance and risk management capabilityunder Basel II standards.
It is drafting a new circular regulating creditinstitutions’ trading and handling of NPLs with the aim of forcing theinstitutions to focus more on bad debt settlement.
Under the draft, private creditinstitutions, which still hold special bonds issued by the VAMC – meaning theyhave not settled bad debts kept at the VAMC yet – will not be allowed to makedividend payments in cash. The fund must instead be used to handle bad debtsand enhance the institutions’ finance status.-VNA
VNA
