Bad debts increased by over $1.1 billion in Q1

Bad debts increased by over $1.1 billion in Q1

Non-performing loans accounted for 1.99 per cent of the banks’ total outstanding loans, compared to 1.85 per cent at the end of 2025.

The rise showed that asset quality pressure is becoming more apparent after a period of rapid credit growth in previous years, especially in sectors sensitive to interest rates and cash flow such as real estate, construction, consumer goods, and corporate bonds. — Photo cafef.vn

Non-performing loans (NPLs) of 27 banks in the first quarter of 2026 rose by nearly VNĐ30 trillion (US$1.14 billion) to more than VNĐ292 trillion, according to consolidated financial statements of the banks.

The NPLs accounted for 1.99 per cent of the banks’ total outstanding loans, compared to 1.85 per cent at the end of 2025.

BIDV topped the list with over VNĐ42.65 trillion in non-performing loans, an increase of nearly VNĐ7.7 trillion in just three months. Sacombank recorded over VNĐ41.49 trillion, and VPBank had over VNĐ37.28 trillion, while Vietcombank exceeded VNĐ10.8 trillion.

The rise showed that asset quality pressure is becoming more apparent after a period of rapid credit growth in previous years, especially in sectors sensitive to interest rates and cash flow such as real estate, construction, consumer goods and corporate bonds.

According to experts, the rise came under the context that businesses and individuals have still faced significant pressure on cash flow after years of the economy continuously facing shocks from the pandemic, supply chain disruptions, geopolitical instability, rising interest rates and declining real estate market liquidity.

The average bad debt coverage ratio across the entire banking system decreased from 83.3 per cent at the end of 2025 to 74.9 per cent at the end of the first quarter of 2026. This meant that the reserve ‘buffer’ of many banks significantly thinned in just one quarter.

Several banks recorded significant decreases in the bad debt coverage ratio. Specifically, TPBank fell from 92.5 per cent to 68.4 per cent; Bac A Bank from 107.5 per cent to 67.9 per cent; PGBank from 51.2 per cent to 31.1 per cent; SHB from 82.4 per cent to 71.2 per cent; and BIDV from nearly 100 per cent to 86.9 per cent.

The decline in the ratio has reflected the increasing pressure to make provisions amidst deteriorating asset quality. When bad debts increase faster than the rate of provision accumulation, the bank's resilience to credit shocks will be significantly affected.

This is also why many banks have become more cautious in their credit strategies recently, especially in high-risk segments such as real estate, consumer lending or corporate clients with weak cash flow.

Dr Châu Đình Linh of the HCM City University of Banking said that many banks had yet to build a sufficiently robust credit risk management foundation, despite consistently high credit growth.

According to Linh, the implementation of Basel II international banking standards and the move towards Basel III in many credit institutions has not yet truly gone into depth, causing the quality of asset growth to lag behind the pace of credit expansion.

The increase in bad debt not only impacts profits but also puts pressure on system liquidity, because cash flow is stuck in uncollectible loans instead of circulating back into the economy.

Looking ahead, he predicted that bad debts of the banking system by the end of 2026 would likely increase compared to the previous period, but would still remain within a controllable range if macroeconomic stability continues, public investment is effectively promoted, exports recover positively, and market confidence gradually improves. 

Bizhub