Pressure from bad bank loans

With rising non-performing loan ratios, banks are under pressure to increase provisions for bad debts, while also facing difficulties in recovering collateral assets.

According to financial report belong to Bank PGBank's non-performing loans at the end of September reached VND 1,175 billion, an increase of 16.6% compared to the beginning of the year. The non-performing loan ratio increased from 2.85% to 3.19%.

Techcombank (Vietnam Technological and Commercial Bank) also has a high ratio. bad debt In the third quarter, it increased slightly to 1.35%, up from 1.28% at the end of the previous quarter.

Non-performing loans at banks increased slightly.

According to the report by The State Bank of Vietnam is the main cause of this. increase Non-performing loans in the banking system stem from many factors, including objective factors such as the macroeconomic situation and natural disasters.

First of all, the Vietnamese economy is still in the process of recovering from the COVID-19 pandemic and other global economic crises. Although the government has implemented many policies to support businesses, the recovery pace remains slow, and many businesses are still struggling to restore production and business operations.

According to Mr. Nguyen Tri Hieu, a banking and finance expert, the financial health of many businesses has not improved significantly, leading to an increase in bad debts. Specifically, approximately 15,000 businesses withdraw from the market each month, much higher than the 10,000 businesses in the same period last year.

Mr. Hieu also warned about the risks. bad debt if banks focus too much on credit Real estate is the focus, while other sectors are being overlooked. According to Mr. Hieu, many real estate businesses are using excessively high financial leverage, 4-5 times their equity capital. This poses a risk of bankruptcy if the market faces difficulties.

The real estate market is also a significant factor contributing to the increase in bad debt. With 70% of collateral at banks being real estate, when this market faces liquidity difficulties, banks find it very difficult to dispose of collateral through foreclosure. Even if foreclosure is successful, banks still suffer significant losses due to the substantial decrease in asset value.

According to the State Bank of Vietnam's report, real estate credit reached VND 3.15 million billion by the end of September, accounting for 20% of the total outstanding loans in the economy. This represents an increase of approximately 9.15% compared to the end of last year, which is 0.15% higher than the overall credit growth rate of the economy (9%).

At the State Bank of Vietnam's recent third-quarter press conference, Mr. Dao Minh Tu, Deputy Governor of the State Bank of Vietnam, emphasized: "The increasing trend of non-performing loans (NPLs) and the relatively high rate of increase are a matter of concern. Currently, the on-balance sheet NPL ratio has reached nearly 5%. If we include potential NPLs, this ratio could reach approximately 6-9%."

Furthermore, the recent impact of Typhoon Yagi has caused significant damage to many key economic areas, especially the agriculture and fisheries sectors.

In that situation, the banks had to act quickly. property for sale Mortgages are used to recover debts. Assets offered for sale include not only real estate but also stocks, cars, machinery and equipment, and even assets under construction...

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