Credit quality improves, the NPL ratio falls below 2pct

11-May-2019 Intellasia | BizLIVE | 7:53 AM Print This Post

At the Banking Industry Overview Forum 2019 on May 8, BUI Van Hai, deputy director of The Banking Supervision Department, Supervision Inspection Agency of The State Bank of Vietnam (SBV), said that the process of restructuring and handling non-performing loan (NPL) in the system of credit institutions had so far achieved many positive results.

First of all, according to Hai, the most important point is the fundamental perfection of the legal framework.

Specifically, the policy to support credit institutions to restructure and handle NPL has been amended and supplemented, for example, Law No. 17/2017/ QH14 amending and supplementing a number of articles of the Law on Credit Institution 2010 (Law No.17); documents guiding Law No.17 issued; detailed the solutions mentioned in the National Assembly’s Resolution No.42 on piloting bad debt handling, the prime minister’s Decision No. 1058 on the scheme of restructuring the system and handling NPL.

Besides, according to leadership of The Banking Supervision Department’s assessment, the management capacity of credit institutions has been gradually improved, approaching international practices. Activities of inspection, internal audit and risk management of credit institutions are strengthened. Business strategy is initially consistent with risk culture.

Along with operational safety and improving credit quality, banking products and services are increasingly diverse and significantly improving the quality of banking services.

Banks are also promoting traditional non-credit services (life insurance, treasury, e-payment, etc.). Asset structure has moved in a positive direction. Capital flow has focused on the field of production and business and priority areas under the government’s guidelines.

Also according to deputy director of The Banking Supervision Department, the scale of the system of credit institutions continues to increase, the financial capacity is being strengthened and the charter capital is increasing rapidly.

“Credit quality has improved. The internal NPL ratio has dropped to below two percent”, Hai said.

This ratio decreased to a low level, reflecting that credit institutions are controlling well the newly arising NPL, along with the results of NPL handling before.

Hai added that during the past period, SBV directed credit institutions to develop plans and roadmap to comply with regulations on share ownership. By the end of 2018, credit institutions basically dealt with and remedied some violations of share ownership and cross-ownership.

 


Category: Finance, Vietnam

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