Six economic sectors make up nearly 100tr dong of bad debts

Nov 12th at 13:13

12-11-2012 13:13:38+07:00

The bad debt situation with the structure according to credit institutions and economic sectors has been answered by the State Bank of Vietnam (SBV)’s governor, Nguyen Van Binh, at the National Assembly’s meeting recently.

At the meeting, the governor said that as of June 30, 2012, the bad debts as reported by credit institutions were 119.139 trillion dong, accounting for 4.49 percent of the total loans. Meanwhile, according to the results of the inspection of the central bank, the bad debts of credit institutions till the end of June 2012 accounted for about 8.8 percent of the total loans.

These are not newly arisen bad debts but in fact, these bad debts have been accumulated for a long time, especially for the macro economic loosening policy stage and Q4/2011 so far when the business environment has been deteriorating, credit growth was slow and the government drastically carried out measures to restructure credit institutions, Binh explained.

Regarding the bad debt structure, the bad debts of the group of state-owned commercial banks accounted for 3.76 percent of the total loans of this credit institution group and made up 44.26 percent of the total loans of the whole banking system.

Meanwhile, the bad debt ratio of commercial joint stock banks was 4.73 percent and 35.3%, finance companies at 12.27 percent and 7.2%, financial leasing companies at 44.72 percent and 6.7 percent and central people’s credit funds at 1.4 percent and 0.45 percent respectively.

The bad debts of foreign banks, branches of foreign banks and joint venture banks accounted for 2.86 percent of their total loans and 5.2 percent of the total bad debts of the entire banking system.

According to Binh, till the end of June 2012, the bad debts of six economic sectors accounted for 96 trillion dong, accounting for 80.49 percent of the total bad debts of the whole economy.

Particularly, manufacturing and processing industry accounted for 4.33 percent of the total loans and 22.5 percent of the total bad debts of the whole banking system. The similar figures of real estate and service sectors were 7.83 percent and 19.25%, wholesale and retail sectors, repair of automobiles and motor vehicles at 4.16 percent and 18.52 percent and transport and warehouse sectors at 11.61 percent and 11 percent respectively.

Finally, bad debts in construction sector made up 4.81 percent of the total loans and 9.5 percent of the total bad debts of the whole banking system.

Regarding solutions, Binh said that the central bank has been building to submit the government a scheme of setting up an asset management company to handle bad debt in a large-scale focus, which focuses on non-performing loans (NPLs) with collateral by real estate.

The figures show a slow trend of bad debts from the second quarter 2012 from 7.29 percent in January to 1.2 percent in June. The Governor stressed that “this shows view and solutions of the government and the central bank in tackling NPLs are reasonable and in the right direction.”