Topic: bad debts

The central bank targetting to reduce bad debt ratio to less than 3%.

Mirae Asset Securities has forecast that bad debt ratios at banks may increase in the closing months of 2022. A recent increase in the bad debt ratio is due to grace periods in debt restructuring coming to an end.

Viet Dragon Securities Company believes the current situation in the banking industry provides a basis for further development.

The NPL coverage ratio of the whole banking industry has increased sharply in the past 6 years, from 66 per cent at the end of 2016 to 150 per cent at present. However, in the context of bad debts starting to inflate, experts said that if some specific policies are not maintained, it will greatly affect the bad debt management process of credit institutions and the process of restructuring credit institutions.

According to State Bank of Vietnam (SBV) Governor Nguyen Thi Hong, as of the end of April, bad debts in the real estate sector totaled VND37 trillion ($1.59 billion), or 1.62 per cent of all outstanding loans in the economy. The central bank is strengthening the inspection of credit applications in the real estate sector to control bad debts and term liquidity risks.