As of June 10, 2011, bad debts of total outstanding loans rose to 2.72 percent of total outstanding loans, up 0.55 percent from the end of 2010, said the State Bank of Vietnam in a statement released yesterday.
Earlier, the local newswire Thanh Nien reported that pass loans (group 1) of the whole banking system make up about 92 percent of total outstanding loans as of April 30, down nearly VND 20 trillion from March, adding that only 30 out of 100 credit institutions had pass loan ratio of 100 percent including 20 foreign banks and 10 non-credit institutions.
The 92 percent proportion of pass loans is “very low”, Head of a commercial bank’s Controlling Operations pointed out, adding that it likely represents higher risks of business loans.
Due to high interest rates and difficulties in access bank loans, many firms had to delay loan repayment at maturity, he said. “The firms would rather pay overdue expenses to keep capital for business operations than settle the loans but can’t borrow again”.
Bad debts also attribute to banks themselves, local media reported, citing a banker that the number of violations in credit activites, fraud and corruption have increased in the last two months without disclosing specific figures.