With bad debt ratios rising, banks are under pressure to increase provisions, while also facing difficulties in recovering collateral.
According to financial report belong to Bank Prosperity and Development Joint Stock Commercial Bank (PGBank) bad debt at the end of September was VND1,175 billion, up 16.6% compared to the beginning of the year. The ratio of bad debt/customer loan balance increased from 2.85% to 3.19%.
Vietnam Technological and Commercial Joint Stock Bank (Techcombank) also has a ratio bad debt In the third quarter, inflation increased slightly to 1.35%, from 1.28% at the end of the previous quarter.
According to the report of State Bank, the main cause of the increase Bad debt in the banking system comes from many factors, including objective factors from the macroeconomic situation and natural disasters.
First of all, the Vietnamese economy is still in the process of recovering from the COVID-19 pandemic and the global economic crisis. Although the Government has introduced many policies to support businesses, the recovery rate is still slow, and many businesses are still facing difficulties in restoring production and business activities.
Mr. Nguyen Tri Hieu - a banking and finance expert - said that the financial health of many businesses has not improved significantly, leading to an increase in bad debt. Specifically, each month, about 15,000 businesses withdraw from the market, much higher than the figure of 10,000 businesses in the same period last year.
Mr. Hieu also warned about the risks. bad debt If banks focus too much on credit real estate while ignoring other sectors. According to Mr. Hieu, many real estate businesses are using too high financial leverage, 4-5 times more than equity. This poses a risk of bankruptcy if the market encounters difficulties.
The real estate market is also a significant cause of the increase in bad debt. With 70% of the collateral assets at banks being real estate, when this market faces liquidity difficulties, it is very difficult for banks to handle the collateral assets through foreclosure. Even if the foreclosure is successful, the bank still suffers great losses because the value of the assets has decreased significantly.
According to the State Bank's report, real estate credit by the end of September was VND3.15 trillion, accounting for 20% of the total outstanding debt of the economy. This level increased by about 9.15% compared to the end of last year, 0.15% higher than the general credit growth rate of the economy (9%).
In the recent State Bank of Vietnam’s third quarter press conference, Mr. Dao Minh Tu - Deputy Governor of the State Bank of Vietnam - emphasized: “Bad debt is on the rise and the rate of increase is quite high, which is an issue that needs attention. Currently, the ratio of bad debt on the balance sheet has increased to nearly 5%. If including potential debt that can become bad debt, this ratio can be up to about 6-9%”.
In addition, the recent impact of Typhoon Yagi has caused great damage to many key economic areas, especially the agriculture and fisheries sectors.
Faced with that situation, banks had to urgently property for sale mortgage to recover debt. Assets for sale include not only real estate but also stocks, cars, machinery and equipment and even future assets...
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