SBV tightens lending regulations with bad loans on the rise in VN
THE State Bank of Vietnam (SBV ) has taken steps to tighten regulations over banks’ use of short-term deposits, reducing its ratio used to finance medium- and long-term loans from 60 per cent now to 40 per cent by September next year.
By the end of September 2020, banks are expected to cut it to 37 per cent. The ratio must be reduced to 34 per cent by September 2021 and to a maximum of 30 per cent by September 2022, Vietnam Insider reported.
The central bank’s policy aims to reduce risk, tighten control and to channel capital into priority sectors and small- and medium-sized enterprises, it said.
Worrying sign
In a recent development, the latest quarter reports from several commercial banks cited by cafef.vn have shown positive earnings but also an increase in the number of non-performing loans (NPLs) compared to the same period last year.
By the end of September, 23 banks reported an alarming trend of NPLs rising. Notably, ABBank said its proportion of NPLs in total asset value increased by 79 per cent, compared to the level on January 1, 2019, attaining 1.7 trillion dong ($73.3 million). Its NPLs’ share in total outstanding loans increases from 1.89 per cent from the beginning of the year to 3.39 per cent.
Reports from other banks also showed a 39 per cent increase for SHB at 7.2 trillion dong, a 32 per cent increase for Techcombank at 3.7 trillion dong and 30 per cent increase for MBBank at 3.7 trillion dong.
The big four banks – Agribank, BIDV, Vietcombank and VietinBank – also reported similar findings with Vietcombank’s NPLs totalling 7.6 trillion dong and BIDV 22.4 trillion dong.
The SBV put total bad loans of 23 banks across the country at 94 trillion dong, up 16 per cent since the beginning of the year. NPLs have been on the rise even for banks with modest or no credit growth since the end of last year.
Notably, potentially irrecoverable debt according to SBV’s standards has risen fast, with ABBank reporting more than one trillion dong, Vietcombank 4.9 trillion dong and BIDV 12.2 trillion dong.