Irrecoverable debts of BIDV, VietinBank and Vietcombank increase after auditing

22-Jul-2016 Intellasia | BizLive | 6:00 AM Print This Post

The State Audit Office of Vietnam (SAV) has published the audit results in 2015 at the State Bank of Vietnam (SBV) and 13 financial institutions, banks and insurance companies; and a special subject on the implementation of the scheme to restructure the system of credit institutions (CIs) period 2011-2015.

Concerning the management of monetary policy, the SAV mentioned that the money supply was generally reasonable and the monetary control was consistent with the objectives to control inflation, stabilise exchange rate, and increase the State foreign exchange reserves. The monetary policy management was basically sticked to the annual growth targets of credit and total means of payment with improvement in market liquidity.

The interest rate level continued to fall by 1.5 to two percent per annum compared to late 2013, while the credit structure continued to be shifted in a positive direction which focused on production and business sector, particularly lending to the priority areas of the government, thereby removing difficulties for production and business.

According to the SAV, commercial banks and insurance companies met the safety limits in operation, and 10 out of 11 audited financial institutions and banks recorded profit, while Mekong Housing Bank Securities Company (MHBS) suffered a loss of 167 billion dong.

However, the SAV also mentioned that the operation of finance and banking organisations continued to face various difficulties, challenges and there were shortcomings and irregularities in management.

Specifically, the total bad debts of the entire system as of December 31st 2014 (according to reports of CIs) were 145.2 trillion dong, up by 28.7 trillion dong, equivalent to 24.6 percent compared to late 2013. This number accounted for 3.25 percent of the total outstanding loans (down by 0.36 percent compared to 2013), and it was 4.83 percent according to calculation of SBV.

The bad debt ratio of the Vietnam Development Bank (VDB) rose sharply. As of December 31st 2014, the bank’s bad debt ratio was 11.05 percent, up by 68 percent compared to 2013.

The bad debt settlement of CIs was mainly implemented through the sale of bad debts to VAMC. The volume of bad debts sold to VAMC reached 79.610 trillion dong out of the total 143.5 trillion dong bad debts handled in 2014. However, VAMC’s bad debt settlement was not efficient and only 28 debt items were handled, equivalent to 627 billion dong out of the total 96.455 trillion dong purchased bad debts.

SAV’s report also pointed out that the debt classification of CIs was not appropriate. Under SAV’s adjustment, BIDV saw a reduction of 379.6 billion dong in the outstanding debts of debt group one and increase of 187.7 billion dong in the outstanding debts of debt group two, while the outstanding debts of group three, four and five saw increase of respectively 133.1 billion dong, 27.5 billion dong and 9.5 billion dong.

Under SAV’s adjustment, the Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) recorded reduction of 142.2 billion dong in debts group one and 1.2 billion dong in debt group three, 14.4 billion dong in debt group four. The bank saw an increase of respectively 144.8 billion dong and 19.2 billion dong in debt group two and five.

The Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank) experienced reduction in debt group one of 142.4 billion dong and increase of 106.9 billion dong in debt group two and 35.5 billion dong in debt group five.

According to SAV’s report, VietinBank, BIDV and VCB recorded shortage in risk provisions of respectively 20.5 billion dong, 36.5 billion dong and 41.3 billion dong.

VCB Bac Sai Gon branch offered 18 customers from Ha Quang Cooperative, Cu Chi district, Hochiminh city a total loan of 55.4 billion dong. As of December 31st 2014, both principal and interest worth 52 billion dong of this loan were not recovered and it was classified in debt group five).

In addition, VDB Lang Son branch and the Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank) – Lang Son branch coincidently disbursed 127 billion dong to Dong Bank Cement Joint Stock Company. Only five billion dong of this loan was recovered.

 


Category: Finance, Vietnam

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