Restructuring associated with bad debt settlement in the period 2021 - 2025 at Agribank Part 1: Opportunities and challenges

In the period of 2021 - 2025, "restructuring associated with bad debt handling" is not only an internal management requirement but also a test of the endurance of the banking system in the context of many fluctuations in the domestic and international socio-economic context. For Agribank - a 100% state-owned commercial bank, playing a key role in developing "three agricultures", restructuring the system, although difficult, will be a key support for the Bank to both complete its political tasks and ensure financial security.

Benefits from legalizing Resolution 42

From January 1, 2024, Resolution 42/2017/QH14 (Resolution 42) on piloting bad debt settlement officially expired. The "special" legal corridor that the banking system has been expecting for the past 6 years has been legalized in the Law on Credit Institutions (amended) 2024 with new regulations on the right to seize and handle secured assets. The legalization of Resolution 42 brings many great benefits to credit institutions in general and Agribank in particular, especially providing solutions to solve the problem of resources for society.

For Agribank, this is even more meaningful as 2025 is an important year to decide on the completion of the Agribank restructuring plan associated with bad debt settlement for the 2021 - 2025 period approved by the Governor of the State Bank (SBV). And, along with the 5 pillars identified in the restructuring process: (1) Bad debt settlement and strengthening provisions; (2) Organization and network restructuring; (3) Digital transformation and upgrading risk management technology; (4) Increasing charter capital to strengthen capital safety; (5) Credit portfolio restructuring; Agribank considers debt settlement and recovery as a key task. At the same time, synchronously deploy solutions to support people and businesses to overcome difficulties, promote production and business, and promptly meet capital needs for the economy .

Agribank always accompanies people and businesses in agricultural and rural development. Photo: Agribank

Specifically, Agribank has assigned targets to implement capital mobilization plans in line with credit growth and optimize capital structure; sustainable credit growth coupled with control, improvement of credit quality, and increased bad debt recovery; implementing solutions to improve and enhance financial capacity to ensure operational safety ratios; restructuring, arranging, and adjusting the network in accordance with legal regulations and practical requirements of Agribank; continuing to modernize the information technology system and strongly digitalize; continuing to arrange and consolidate the operations of subsidiaries in a safe and effective direction, in line with Agribank's development orientation; strengthening risk management, improving internal inspection and supervision activities, implementing personnel work, focusing on improving the quality of human resources, meeting governance needs; Implement policies, salary and bonus mechanisms, incentives, and create motivation for staff throughout the system in promoting credit and recovering bad debts.

Bad debt decreased sharply

Looking at the whole period of 2021 - 2025, Agribank has achieved proud results. Agribank has exceeded its strategic targets in terms of scale and growth - factors demonstrating internal strength and competitiveness; total assets have reached over 2.3 million billion VND, an average growth of 9.6%/year, far exceeding the target of 7 - 11%/year; mobilized capital reached 2.159 million billion VND, an average growth of 8.95%; outstanding loans reached 1.851 million billion, an average growth of 9.93%/year. Notably, in the first 6 months of 2025, capital increased by 130 trillion, 5 times higher than the same period last year; outstanding loans increased by 130 trillion - the highest increase since 2021...

In particular, the bad debt ratio according to the restructuring plan has decreased sharply, completing the bad debt target nearly 1 year ahead of schedule. Along with that, the average debt recovery and settlement reached about 10,800 billion/year, double the initial target. In particular, the bad debt ratio on the balance sheet is much lower than that of Big4 banks. Continuing to maintain and affirm the leading position in the banking system in many aspects: the network is being comprehensively restructured with more than 2,300 transaction points covering nearly 100% of communes nationwide; being the leading commercial bank in terms of total assets, capital and outstanding loans; being the main force in developing "three rural areas" with outstanding loans in agriculture and rural areas accounting for nearly 30% of the outstanding loans of the entire system in this area...

In addition, Agribank has gradually implemented digital transformation and modernized its information technology system, deployed more than 200 products and services and 150 digital utilities, 95% of transactions are conducted via digital channels and 47% of customers use digital services. Agribank Plus currently has more than 150 functions and utilities. The number of deposit customers is currently 23.2 million, an increase of nearly 5.8 million compared to 2020....

Despite such advantages, Agribank also faces many difficulties and challenges, especially in 2024 - 2025, such as: high credit costs when debt restructuring must be reclassified and sufficient provisions must be made; pressure to increase capital to meet Basel II standards; handling collateral assets in rural areas still has many legal and enforcement problems... If these issues do not have synchronous support solutions from the authorities, the ability to maintain bad debt below 2% of the entire system will face many challenges in the coming period.

Agribank's efforts have been recognized by a series of prestigious domestic and international awards such as: National Quality Award 2024, ranked Ba2 by Moody's Rating and BB+ by Fitch Rating. For many consecutive years, Agribank has been ranked in the Top 10 largest taxpayers and is the second largest corporate income tax paying bank in Vietnam... These are numbers that demonstrate the efforts and very proud results of Agribank in the process of implementing the restructuring plan associated with bad debt settlement in the period 2021 - 2025.

Source: https://daibieunhandan.vn/tai-co-cau-gan-voi-xu-ly-no-xau-giai-doan-2021-2025-tai-agribank-bai-1-co-hoi-va-thach-thuc-10389249.html