Bad debt ratio at 2.3% by end 2017

Non-performing loans (NPLs) of credit institutions were controlled effectively in 2017, helping the NPL ratio of the entire banking system reduce to 2.3 per cent from 2.46 per cent in late 2016.

Bad debts worth VND93.7 trillion (US$4.12 billion) were recovered last year. - Photo cafef.vn

Deputy governor of the State Bank of Viet Nam (SBV), Nguyen Kim Anh, said the ratio of NPLs and other risky debts that could become NPLs also slid to 7.91 per cent by the end of November from 10.08 per cent at the end of 2016.

From January to November last year, NPLs worth VND93.7 trillion (US$4.12 billion) were recovered, raising the total NPLs that were recovered in the past six years to VND705.3 trillion.

The positive result was possible due to an improvement in legal frameworks for restructuring credit institutions and dealing with bad debts, such as the Resolution No 42/2017/QH14 issued by the National Assembly and the amended Law on Credit Institutions.

Notably, the National Assembly’s Resolution 42 on supporting bad debt settlement has begun to push the bed debt settlement process, though it has only come into effect for the last four months of 2017. According to the central bank, the entire banking system recovered a total of more than VND50 trillion until December 31 based on the resolution.

Reports from the National Financial Supervisory Commission also estimated that the pre-tax of profits of the banking sector in 2017 would rise more than 40 per cent over the previous year and after-tax profits by 44.5 per cent, mainly thanks to the handling of bad debt, hastened by the National Assembly’s Resolution 42.

SBV said this year it would step up the restructuring of the banking sector as well as settlement of bad debt.

SBV stated that lending this year would continuously focus on the Government’s prioritised sectors, such as agriculture, exports, spare-parts industries, small- and medium-sized enterprises and hi-tech firms, while limiting the capital to risky industries such as real estate and securities.

Source VNA