Agribank recorded the highest irrecoverable debts by the end of Q3/2021

03-Dec-2021 Intellasia | Nhip song Kinh te | 5:02 AM Print This Post

Figures from the financial stateemnts of 28 banks showed that the total outstading irrecoverable debts (group 5 debts) as of September 30th reached about 66.556 trillion dong, down by nearly eight percent compared to the end of 2020. In particular, as Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank) has not yet announced the financial statement in the third quarter (Q3) of 2021, according to the data until June 30th, the bank had the highest number of irrecoverable debts with 14.330 trillion dong. However, this number is 12 percent less than the end of 2020, equivalent to over two trillion dong.

Following Agribank, the group 5 debts of Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) by the end of Q3/2021 were 13.881 trillion dong, down by 1.809 trillion dong compared to the end of Q2/2021 and down by 2.644 trillion dong compared to the end of last year.

In contrast to Agribank and BIDV, Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) recorded an increase of 1.941 trillion dong of total irrecoverable debts in the first three quarters of 2021, bringing its total group 5 debts to nearly 6.279 trillion dong by the end of Q3/2021. Similarly, this type of debts at Saigon Hanoi Commercial Joint Stock Bank (SHB) also rose by nearly 30 percent to 4.937 trillion dong.

In addition to the above banks, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), Vietnam International Commercial Joint Stock Bank (VIB), Asia Commercial Joint Stock Bank (ACB), Export Import Commercial Joint Stock Bank (Eximbank) and Southeast Asia Commercial Joint Stock Bank (SeABank) are also in the top 10 banks with the most irrecoverable debts as of September 30th 2021. The total irrecoverable debts of these top 10 banks reached up to 53.084 trillion dong, accounting for up to 80 percent of the total group 5 debts of 28 surveyed banks.

Despite the large volume of irrecoverable debts, these banks are all leading banks in terms of outstanding loans. Therefore, the proportion of group 5 debts only fluctuated in the range of 0.3 1.5 percent of the total outstanding loans in Q3/2021. For example, the 3.5 trillion dong of irrecoverable debts of VietinBank only accounted for 0.3 percent of the total outstanding loans.

Among the 28 surveyed banks, Techcombank recorded the lowest ratio of group 5 debts on total outstanding loans, reaching 0.1%. This number has steadily maintained since the beginning of the year, mainly thanks to the bank’s active provisions for risks.

In addition to Techcombank, some other banks also have a very low ratio of group 5 debts to total outstanding loans, such as Tien Phong Commercial Joint Stock Bank (TPBank, 0.2%), VietinBank (0.3%), Vietnam Prosperity Commercial Joint Stock Bank (VPBank, 0.3%), Military Commercial Joint Stock Bank (0.3%), and Bac A Commercial Joint Stock Bank (BacABank, 0.4%). In contrast, Petrolimex Group Commercial Joint Stock Bank (PGBank) and Viet Capital Commercial Joint Stock Bank (VietCapitalBank), despite having only several hundreds of irrecoverable debts, are still among the banks with the highest ratio of group 5 debts to total outstanding loans in the system.

After the first three quarters of this year, 16 out of 28 banks recorded increases in irrecoverable debts compared to the end of 2020. Specifically, Nam A Commercial Joint Stock Bank (NamABank) topped the list with group 5 debts by the end of Q3/2021 reaching 1.156 trillion dong, 2.5 times higher than the beginning of the year; followed by HCM City Development Commercial Joint Stock Bank (HDBank, 56.1%), An Binh Commercial Joint Stock Bank (ABBank, 52%), Vietcombank (44.7%), SHB (29.9%), etc.

Conversely, the group 5 debts of Kien Long Commercial Joint Stock Bank (Kienlongbank) decreased the most from 1.782 trillion dong at the end of 2020 to 537 billion dong. This result is thanks to the bank’s completion of the settlement of the volume of irrecoverable debts of nearly 1.9 trillion dong guaranteed by 176 million STB shares of Sacombank. In addition to Kienlongbank, 11 other banks also reduced this debt type in the first nine months of 2021, such as VPBank (down by 47%), VietinBank (down by 41.4%), TPBank (down by 29.4%), Eximbank (down by 26.5%), Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank, down by 21.9%), etc.

The trend of downsizing group 5 debts in the first three quarters of 2021 was greatly supported by the SBV’s policy to keep the debt group unchanged for customers affected by the Covid-19 epidemic.

According to Nguyen Quoc Hung, general Secretary of the Vietnam Banking Association, the SBV’s permission to maintain the debt groups makes the picture of bad debts to not accurately be reflected.

Recently, the SBV has issued three Circulars 01, 03, 14 regulating debt structure and rescheduling. “Over 600 trillion dong have been restructured, but this is just the initial figure. From now to the end of the year or to 2022, this number will be even higher, because the outstanding loans affected by the epidemic are more than 3,000 trillion dong. Moreover, the restructured debts are actually bad debts,” said Hung at a recent seminar.

In addition to the policy supports, the promotion of using provisions to deal with bad debts also helped many banks reduce the size of group 5 debts in the first nine months of 2021. Accordingly, BIDV has used more than 12.126 trillion dong of its provisions for risks to handle debts, while this number is 5.1 trillion dong for VietinBank, 2.955 trillion dong for MB, etc.

Banks have also actively settled bad debts through directly selling or liquidating secured assets. In Q1/2021, Kienlongbank sold 176 million STB shares the secured assets for the group 5 debt item worth nearly 1.9 trillion dong. Meanwhile, according to Viet Capital Securities Company, Sacombank may have liquidated three real estate secured for the debts worth one trillion dong.

In addition to the group of state-owned banks, Agribank, BIDV and VietinBank continuously offered to sell the loans worth hundreds/thousands of billions of dong in the first nine months of 2021.

 

Category: Finance, Vietnam

Print This Post

Comments are closed.