Data from state management agencies and independent research units both reflect a higher bad debt ratio in the second quarter of 2024, when businesses and individuals still have difficulty repaying their debts.
Securitization is one of the existing solutions to deal with bad debt in countries like Japan, Korea, China... Experts suggest that Vietnam can consider implementing this solution.
How much does bad debt increase?
According to Tuoi Tre statistics based on the financial reports of 27 listed banks in the second quarter of 2024, the bad debt balance increased by nearly VND 45,000 billion (equivalent to 22%) compared to the end of 2023.
The above figures are the absolute increase. As for the ratio (bad debt/total outstanding debt), calculated by WiGroup, a financial data specialist, it reached 2.22% at the end of the second quarter of 2024 - higher than the 2.18% of the first quarter of 2024 and the 1.96% of the fourth quarter of 2023.
Speaking to Tuoi Tre, Mr. Le Hoai An, founder of Integrated Financial Solutions Joint Stock Company, cited data from the State Bank saying that bad debt on the balance sheet of the entire system (both listed and unlisted) at the end of the second quarter had increased to nearly 5%, and if other potential debt is included, it is at 6.9%.
Mr. An also noted that the above ratio is not the bad debt level of all banks, but the average level. Of which, the listed banking sector (accounting for about 80% of outstanding loans) is still below 3%, the rest is mostly in the unlisted sector or parties that are restructuring.
"This is bad debt from weak domestic businesses, and when the economy is in difficulty, this group of businesses becomes an even more likely source of bad debt and in fact has been and is being zoned for handling by the State Bank," said Mr. An.
A manager at a foreign-invested bank in Vietnam said bad debt is increasing while credit growth is still low due to weak capital absorption capacity of enterprises.
"Recently, both domestic and international macro-economic conditions have been difficult, unemployment is high, production and business have declined, causing borrowers to be unable to repay their debts," he said.
Therefore, despite the restructuring mechanism and maintaining the debt group, bad debt still increases. Notably, bad debt is still putting pressure on large and medium-sized commercial banks due to the negative impact of the corporate bond and real estate markets...
According to Mr. Le Hoai An, the current bad debt situation is not only related to the general context but also depends on the risk appetite of each bank.
Data from WiGroup also reflects this: the state-owned banking group has an average bad debt ratio of about 1.5%, large private banks from 2 - 3%, and medium and small private banks from 4 - 6% and has tended to increase sharply in recent quarters.
Mr. An explained that many small banks always have high bad debts because their ability to choose a customer base to lend to is worse than that of large banks. Although they have a higher quality customer base and better management ability, due to the difficult economic context, large commercial banks or state-owned banks still have increased bad debts.
Need to prepare for the end of debt deferral
Meanwhile, many banking personnel are concerned that when Circular 02 expires, debts will be restructured to the correct group, thereby increasing bad debts.
Regarding solutions, Ms. Ha Thi Hai Ly, Banking Faculty, Banking Academy, recommended developing a debt trading market.
In addition, each bank itself needs to proactively increase bad debt provisions in accordance with the actual situation, and must accept a decrease in profits.
Ms. Le Thi Bich Ngan, lecturer of the Finance Department of the Banking Academy, said that securitization is one of the existing solutions to handle bad debt in countries such as Japan, Korea, China, Thailand... that Vietnam can refer to.
But to do so, the key is to have a clear legal framework for a secondary market - where collateral/mortgages are converted into securities that can be bought, sold and exchanged.
In addition, some experts proposed developing an early warning system to promptly detect and handle bad debt risks, avoiding sudden increases in bad debt that affect the banking sector and the economy.
According to Tuoi Tre, some banks are currently working with some market data parties to build their own warning systems with early risk identification models depending on different levels, industries, and geographical areas...
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