SBV to Cut down Bad Debts to 4 per cent in 2006

The State Bank of Vietnam, the country’s central bank aims to reduce the bad debt ratio in the local banking system to 4 per cent of total outstanding loans by the end of this year from 4.5 per cent in 2005, SBV’s Governor Le Duc Thuy said on January 19.  

 

"The level of 4 per cent will be a great achievement," Thuy said, adding that Vietnam now uses international accounting standards to calculate the debt ratios.

 

State-run commercial banks themselves recently reported their combined bad debt of 5 per cent of total lending, but the central bank’s inspectors ruled that the rate was 7.7 per cent after re-examining their reports, he said.

 

Vietnam has five State-run commercial banks, including the Bank for Foreign Trade of Vietnam (Vietcombank), the Bank for Agriculture and Rural Development of Vietnam (Agribank), the Bank for Investment and Development of Vietnam (BIDV), the Mekong Housing Bank (MHB) and the Vietnam Industrial and Commercial Bank (Incombank). These banks control nearly 70 per cent of the domestic market lending.