Of the 29 banks that have announced their second-quarter financial reports, 24 banks recorded an increase in bad debt ratios, with many banks recording an absolute increase in bad debt of up to 30-50% compared to the end of last year.
Bad debt continues to increase at many banks, not only putting pressure on profit growth but also increasing credit risks.
This reality requires banks to have timely response measures to control bad debt and minimize risks, ensuring safety for the entire financial system in the context of the economy facing many challenges.
The increase in bad debt does not only occur in a few banks but is a common phenomenon in the whole system.
Of the 29 banks that have announced their financial reports for the second quarter of 2024, 24 banks recorded an increase in bad debt ratios, with many banks recording an absolute increase in bad debt of up to 30-50% compared to the end of last year.
In terms of absolute balance, Vietnam Prosperity Joint Stock Commercial Bank ( VPBank ) leads with total bad debt reaching VND 31,712 billion at the end of the second quarter of 2024, an increase of 11.6% compared to the end of the previous year.
At the Joint Stock Commercial Bank for Agriculture and Rural Development ( Agribank ), total bad debt as of the end of June was VND29,274 billion, up 2% compared to the beginning of the year.
Similarly, the Joint Stock Commercial Bank for Investment and Development (BIDV) and the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) also recorded a significant increase in total bad debt balance, with BIDV increasing by 28% to VND28,687 billion and VietinBank increasing by 48.4% to VND24,646 billion.
However, these are not the banks with the fastest bad debt growth rate in the past six months. In terms of bad debt growth rate, we must mention Bac A Commercial Joint Stock Bank (Bac A Bank) with bad debt balance increasing sharply by 65.3% compared to the end of 2023, Viet A Commercial Joint Stock Bank (VietABank) increased by 52.3%, Loc Phat Commercial Joint Stock Bank (LPBank) increased by 48.6%, Vietnam Thuong Tin Commercial Joint Stock Bank (VietBank) increased by 47.4%...
On the other hand, only Saigon-Hanoi Commercial Joint Stock Bank (SHB) and Prosperity and Development Joint Stock Commercial Bank (PGBank) recorded a decrease in bad debt balance compared to the end of 2023. Of which, SHB's bad debt balance decreased by 2.7% compared to the beginning of the year to VND 12,877 billion. PG Bank's bad debt decreased by 5% compared to the beginning of the year to VND 958 billion.
According to a report from the State Bank, the system's on-balance sheet bad debt by the end of June 2024 reached VND 795,500 billion, an increase of 5.77% compared to the end of 2023, with the bad debt ratio at 4.56%, a slight increase compared to the end of 2023 and almost double that of the end of 2022.
According to experts, bad debt is not only an indicator reflecting credit risk, but also a measure of the difficulties and risks that the economy is facing.
The increase in bad debt in the banking system comes from many causes. Among them, the economy is still in the recovery phase after the COVID-19 pandemic and is affected by global fluctuations, making it difficult for many businesses and individuals to repay their debts.
Furthermore, some bad debts are also the result of a lax credit assessment process, which leads to a low assessment of customers' ability to repay their debts.
Forecasting that bad debt will continue to increase in the context of the economy facing many risks and challenges, Mr. Nguyen The Minh, Director of Analysis of Yuanta Vietnam Securities Joint Stock Company, said that the current bad debt ratio on the balance sheet is 5%, and if including potential debt and debt sold to VAMC, this ratio could reach 6.9%.
"However, with the current liquidity of the system and the gradual recovery of the domestic economy, the pressure on bad debt is not yet too worrying," Mr. Minh assessed.
In addition, according to Dragon Capital Securities Corporation (VDSC), on-balance sheet bad debt tends to increase by about VND 75,900 billion compared to the end of 2023, while on-balance sheet, potential and restructured debt increases by about VND 30,700 billion.
In particular, debt restructured and maintained in the same debt group according to Circular No. 06/2024/TT-NHNN and Circular No. 02/2023/TT-NHNN increased quite sharply, showing that many businesses still have difficulty in repaying debt and need support from debt restructuring policies.
Timely control of bad debt
The increase in bad debt not only affects banks' profits but also increases credit risks, requiring banks to have timely and effective response measures to control bad debt and ensure the stability of the financial system.
Faced with increasing bad debt pressure, many banks have increased their risk provisions to protect their finances. This is an important measure to help banks minimize credit risks and deal with bad debts.
According to the second quarter financial report, VietinBank increased its credit risk provision to VND7,817 billion, up 21% over the same period last year, although pre-tax profit only reached VND6,750 billion.
Similarly, BIDV also set aside VND5,358 billion for credit risk provisions, up 36% year-on-year, while pre-tax profit reached nearly VND15,549 billion in the first 6 months of the year, up 12%.
In addition to increasing risk provisions, the State Bank has also directed banks to implement debt restructuring and bad debt settlement measures according to the 2021-2025 program.
This includes continuing to control and limit the emergence of new bad debts, improving credit quality and closely monitoring credit granting activities and bad debt handling.
The State Bank has also held press conferences to publicize and clarify the issue of bad debt, emphasizing the shared responsibility of all parties in handling bad debt, not only of banks but also of customers.
Deputy Governor of the State Bank Dao Minh Tu affirmed: Bad debt is not only the result of credit activities but also the consequence of general difficulties of the economy.
Credit institutions need to coordinate closely with the State Bank to effectively handle bad debts, while raising customers' sense of responsibility in debt repayment.
The increase in bad debt is a major challenge for the Vietnamese banking industry, requiring banks to have a strict and effective risk management strategy.
However, this is also an opportunity for banks to restructure, improve credit quality, and enhance financial stability.
A report by the analysis department of MB Securities Joint Stock Company (MBS) predicts that banks with solid asset quality that have been verified since the COVID-19 period up to now, such as Asia Commercial Joint Stock Bank (ACB), Joint Stock Commercial Bank for Foreign Trade (Vietcombank), Vietnam Technological and Commercial Joint Stock Bank (Techcombank), etc., will easily overcome the pressure of provisioning in the following quarters when boosting credit growth./.
Source: https://baolangson.vn/them-rui-ro-cho-he-thong-tai-chinh-khi-ap-luc-no-xau-tiep-tuc-gia-tang-5018029.html
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