Top Vietnamese State Lenders Record High Bad Loan Ratios

Vietnam's four largest state-run banks record bad debt ratios ranging from 4 per cent to 10 per cent, said state media on August 29.

 

The four banks, namely the Bank for Agriculture and Rural Development (Agribank), the Bank for Foreign Trade of Vietnam (Vietcombank), the Bank for Investment and Development of Vietnam (BIDV) and the Industrial and Commercial Bank of Vietnam (Incombank), account for 70 per cent of total outstanding loans of the local banking system.

 

Non-performing loans (NPLs) of all six state banks of Vietnam were reported at 7.7 per cent of their total lending last year, the central bank said. [The other two are the Mekong and Hanoi Housing Development Banks.]

 

In June, central bank governor Le Duc Thuy reported at a National Assembly Congress that bad debts at the end of 2005 made up 3.15 per cent of total loans in the country's banking system based on international standards.

 

The central bank targeted to rein the bad debt ratio at 4 per cent of loans by the end of this year.

 

An economist from the UN Development Program (UNDP) in Vietnam said up to 15 per cent of Vietnamese bank loans were bad based on international accounting standards.

 

Recently, the State Bank of Vietnam has allowed state owned banks to sell some bad debts to the Ministry of Finance’s Debt and Assets Trading Company (DATC).